$13.6 Billion in Exposure: A Crucial Opportunity for Bulls
As the clock ticks down to November 29th, the Bitcoin community is bracing itself for its largest monthly options expiry of 2024, with a staggering total exposure of $13.6 billion. This significant event presents a pivotal opportunity for bulls to push Bitcoin’s price above the coveted $100,000 mark.
Assessing the Impact of Call and Put Options
To gauge the potential impact of this event, it is essential to assess the current state of call (buy) and put (sell) options. According to Deribit, CME, OKX, Binance, and Bybit, the aggregate notional value of Bitcoin call options for November 29th stands at a whopping $7.4 billion. In contrast, the open interest for put options totals $6.2 billion, resulting in a narrow disparity of just 19%.
A Shift in Investor Sentiment
The S&P 500 has struggled to maintain levels above 6,000 over the past three weeks, signaling growing investor caution. This shift in sentiment is reflected in the United States five-year Treasury yield, which has declined from 4.35% on November 15th to its current 4.12%. Investors are increasingly prioritizing government bonds’ relative safety, even at lower returns.
A Flight to Quality: What It Means for Bitcoin
Periods of macroeconomic uncertainty often trigger a flight to quality, prompting investors to exit riskier assets. However, the recent 5% rebound from Bitcoin’s $90,775 low on November 26th suggests that confidence remains strong amid 34% gains over the last 30 days.
Inflation Concerns and Tariffs: A Double-Edged Sword
Economists at Pantheon Macroeconomics have warned that US Personal Consumption Expenditures (PCE) inflation could rise above 3% if President-elect Donald Trump implements import tariffs, according to Yahoo Finance. Separately, Barclays analysts noted:
Temporary and uncertain tariffs of this nature create natural incentives to delay investments.
The Notional Value of Call Options
Notably, only 20% of call options have strike prices at or above $100,000, representing a notional value of $4.25 billion for the November expiry. In contrast, less than 2% of put options target $100,000 or higher, effectively rendering most of them worthless and reducing their notional value to about $80 million.
Four Scenarios for the Deribit Exchange
Based on current price trends, there are four probable scenarios for the Deribit exchange. The availability of call and put options for the Nov 28th expiration will depend on Bitcoin’s settlement price at 8:00 am UTC. This analysis assumes that call options are primarily used for bullish positions, while put options reflect neutral-to-bearish strategies.
Scenario 1: Between $86,000 and $90,000
The net outcome favors the call (buy) options by $1.65 billion.
Scenario 2: Between $90,000 and $94,000
The net outcome favors the call (buy) options by $2.6 billion.
Scenario 3: Between $94,000 and $98,000
The net outcome favors the call (buy) options by $3.55 billion.
Scenario 4: Between $98,000 and $102,000
The net result favors the call (buy) options by $4.58 billion.
Conclusion
In conclusion, the bears face substantial pressure to drive Bitcoin’s price below $90,000 before the November options expiry to prevent call options from prevailing. However, Bitcoin’s resilience amid inflation concerns suggests that prices could reach $100,000 or higher soon after these BTC options expire.
Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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