3 reasons why Bitcoin bulls are well positioned to profit from this week’s $4.2B options expiry
Regulation continues to be the primary concern for Bitcoin bulls, especially after the Commodity Futures Trading Commission (CFTC) sued Binance for trading and derivatives law violations. The regulator wants Binance to repay the trading profits, revenues, salaries, commissions, loans and fees it received from US citizens, as well as paying civil penalties for the violations.
The increase in Bitcoin’s price was also fueled by a shift in sentiment toward risk assets after the U.S. Federal Reserve Chair Jerome Powell said interest rate hikes are no longer the default move to curb inflation. The central bank understood that the current situation will likely “result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.”
Fixed-income investors earn more when interest rates rise, so buying stocks and commodities becomes less appealing. As a result, by reversing the strategy and adding $339 billion in liabilities in two weeks, the Fed chose to contain the banking crisis, which may cause inflation to spiral out of control.
Given the accretive scenario for risk assets, Bitcoin bulls can profit up to $1.4 billion in Friday's monthly options expiry.
The open interest for the March 31 options expiry is $4.2 billion, but the actual figure will be lower since bears were expecting sub-$26,500 price levels. These traders were caught by surprise as Bitcoin gained 32% between March 12 and March 17.
The 1.34 call-to-put ratio reflects the imbalance between the $2.4 billion call (buy) open interest and the $1.8 billion put (sell) options. However, if Bitcoin's price remains near $28,000 at 8:00 am UTC on March 31, only $25 million worth of these put (sell) options will be available. This
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