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Bitcoin Derivatives Metrics Point To A Move To $48K, But Only After A Retest Of Lower Support

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Bitcoin Derivatives Metrics Point To A Move To $48K, But Only After A Retest Of Lower Support

Bitcoin (BTC) saw an 11% gain in the past week after the $46,000 resistance finally broke after 82 days.

Many crypto pundits argue that Terraform Labs CEO Do Kwon has played an important role in the price change, but is yet to be determined.

iexclusivenews reports that a Bitcoin address thought to belong to Terra has now amassed almost $1.5 billion in BTC following a $139 million purchase on March 29.

TerraUSD (UST), an algorithmic stablecoin, aims to acquire up to $10 billion worth of BTC to back its “dollar” reserve.

This online news outlets understands that on the macroeconomic side, there have been mixed feelings.

The UK Consumer Price Index increased by 6.2% year-on-year, which is above the 5.9% consensus.

However, in the United States, the opposite effect occurred as durable goods orders showed a 2.2% decrease.

The current reading is the highest U.S. inflation in 40 years and interest rates near zero provide a bullish environment for scarce assets, including Bitcoin.

Bitcoin Is Discounted Compared To Hard Assets

Given that the S&P 500 is only 4% below its all-time high of 4,819, Bitcoin’s recent strength should come as no surprise.

Bulls entered the market stronger after call (buy) option instruments dominated the April 1 options expiry.

While bears were caught off guard after Bitcoin price stabilized above $47,000 on March 30.

Bitcoin options aggregate open interest for April 1. Source: CoinGlass

According to iexclusive News Nigeria, a broader view using the call-to-put ratio.

Shows that Bitcoin bulls have a 39% advantage because the $605 million call (buy) instruments have a higher open interest than the $435 million put (sell) options.

The 1.39 call-to-put indicator, on the other hand, is deceptive because most bearish bets will become worthless.

For example, if the price of Bitcoin remains above $47,000 at 8:00 a.m. UTC on April 1, only $80 million in put (sell) options will be available.

That effect occurs because the right to sell Bitcoin at $45,000 has no value if it is trading above that level.

Bitcoin Bulls Aim For A $385 Million Profit

Based On The Current Price Action, The Three Most Likely Scenarios Are As Follows:

The number of options contracts available for bulls (calls) and bears (puts) on April 1 varies depending on the expiry price.

The theoretical profit is the imbalance favoring each side:

3,000 calls vs. 2,650 puts between $44,000 and $46,000. The net result is a $120 million advantage in favor of call (bull) instruments.

Between $46,000 and $48,000, there are 7,900 calls and 1,700 puts. The net result is $290 million in favor of bulls.

Between $48,000 and $49,000, there are 9,350 calls and 1,300 puts. The net result is $385 million in favor of call (bull) instruments.

This rough estimate takes into account only call options used in bullish bets and put options used exclusively in neutral-to-bearish trades.

Nonetheless, this oversimplification excludes more complex investment strategies.

What You Need To Know

For example, a trader could have sold a call option, gaining negative exposure to Bitcoin above a certain price.

Unfortunately, there is no simple way to calculate this effect.

Bitcoin bulls only need a small increase above $48,000 to profit $385 million on April 1.

The best-case scenario, on the other hand, requires a 3% price drop from the current $47,200 to reduce their loss to $120 million.

According to Coinglass data, Bitcoin bears liquidated $580 million in short positions between March 26 and March 30.

As a result, bulls should continue to show strength by keeping Bitcoin above $47,000 as the options expiry date of April 1 approaches.

The author’s views and opinions are solely his or her own and do not necessarily reflect those of iexclusivenews.

Every investment and trading decision entails some level of risk. When making a decision, you should conduct your own research.