CoinTelegraph report:
Author: Marcel Pechman, CoinTelegraph; Translation: Wuzhu
BTC is about to face its second-largest monthly options expiration since 2024, with a total open interest of $8.1 billion. The question is: will this be enough to drive the price up to $70,000, or are the bearish factors too strong to ignore?
The current macroeconomic environment favors risk assets, including Bitcoin, and the September 27 options expiration will be a key event. If Bitcoin stays above $63,000, neutral to bullish option holders will be in a favorable position. However, bears have enough incentive to suppress this advantage by pushing Bitcoin’s price below $60,000.
Therefore, it is crucial to analyze the positioning of the options market and the potential net impact of the monthly expiration.
On September 24, the People’s Bank of China (PBOC) announced plans to lower borrowing costs and inject liquidity into the economy, including reducing mortgage repayment plans, which caused a surge in the Chinese stock market. In addition, the PBOC pledged $113.8 billion to support the stock market, including stock purchases and repo measures. According to Yahoo Finance, Lynn Song, Chief Economist for ING Greater China, commented, “There is still room for further easing in the coming months.”
By stimulating the economy and lowering interest rates, central banks around the world are weakening the appeal of fixed income investments while exacerbating inflation pressures. In such an environment, scarce assets like Bitcoin often perform well, especially when the S&P 500 index is less than 1% away from recent historical highs, and housing prices in the top 20 metropolitan areas in the United States have risen 5.9% in the past 12 months, according to the Case-Shiller index.
Given these favorable macroeconomic conditions, Bitcoin bulls have reason to believe that the level of $63,000 will be maintained until the September 27 options expiration and may even push towards $65,000. However, to assess the likelihood of this bullish momentum, it is necessary to examine the positions of Bitcoin options traders before expiration.
Unfilled Bitcoin options contracts as of September 27, in USD. Source: Laevitas.ch
From a broader perspective, the open interest of bullish (call) options worth $4.9 billion exceeds that of bearish (put) options worth $3.2 billion by 53%. Although this is not uncommon – cryptocurrency traders typically lean towards bullish positions – the overly optimistic sentiment reflected in betting on Bitcoin prices of $90,000 or higher seems overly ambitious, especially less than three days before the expiration of these options.
In fact, 55% of call options have an exercise price of $70,000 or higher, so $2.22 billion in nominal value has a real chance of participating in the September monthly expiration. Similarly, 69% of put options have an exercise price of $56,000 or lower, making them likely to be worthless at expiration, reducing the outstanding nominal value to about $1 billion.
Bitcoin bullish (call) options are in a favorable position, favoring the bulls.
The following are the four most likely scenarios based on current price trends. The availability of call and put options expiring on September 27 depends on the settlement price of Bitcoin at that time.
This rough estimate assumes that call options are predominantly used for bullish positions, while put options are used for neutral to bearish strategies. However, it should be noted that this is a simplification and does not take into account more complex investment strategies.
Between $57,000 and $58,000:
The net result favors put (sell) options, amounting to $250 million.
Between $58,000 and $60,000:
The net result is expected to be roughly balanced between call and put options.
Between $60,000 and $62,000:
The net result favors call (buy) options, amounting to $550 million.
Between $62,000 and $64,000:
The net result favors call (buy) options, amounting to $1 billion.
Bears face immense pressure to push Bitcoin’s price below $60,000 before the September monthly expiration to avoid the situation where call options profit $550 million. However, given the favorable macroeconomic conditions (including the Fed rate cuts and the stimulus measures by the People’s Bank of China), Bitcoin bulls seem to have the upper hand.
