With the passage of the Ethereum spot ETF and the change of US presidential candidates' stance on cryptocurrencies, the cryptocurrency market seems to be gradually recovering. Bitcoin has risen from a level of US$57,000 at the beginning of this month to a maximum of approximately US$71,000, an increase of 24.6%. .
Bitcoin is currently fluctuating at a high between US$68,000 and US$70,000. It was temporarily trading at US$68,556 at the time of writing, down 0.2% in the past 24 hours. It remains to be seen when it will take a clear direction.
Bitcoin Bulls Are Too Optimistic, Betting Above $70,000
However, judging from the data on options expiring at the end of this month, many investors have more optimistic expectations for Bitcoin’s rebound this month. According to data from options trading platform Deribit, nearly 90% of Bitcoin options that will expire on May 31 have exercise prices set at $70,000 or above. It shows that most investors are betting that Bitcoin can rise significantly before the end of May.
Since the current market price of Bitcoin is about $68,500, the gap between the exercise price of these bullish investors and the market price is still some distance away, which means that unless there is a larger increase, these buy calls will It is likely that it will be invalid after expiration, causing investors to lose their premiums.
Currently, the data on Bitcoin options expiring on May 31 on Deribit is as follows:
- A total of $4.693 billion expires ($6.5 billion if other exchanges are included), with a call to put ratio of 0.6
- Max Pain is $65,000
Breaking through $70,000, BTC bulls will have $270 million in potential profits
Further analysis, on May 31, if the price of Bitcoin remains around $67,800, the options market will look like this:
- The total open interest in calls will be worth approximately $135 million.
- The total open interest on the puts at $68,000 is approximately $145 million.
Such a relatively balanced allocation means that the market's expectations for a clear direction in price are not strong. However, both bulls and shorts have sufficient financial incentives to push the price in their favor before the options expire (usually the shorts have the stronger influence).
Here are two scenarios:
- Put option has profit potential of $95 million if Bitcoin price drops to $65,900
- Conversely, if the price rises to $70,000 or higher, the call option offers a potential benefit of up to $270 million.
