Bears are keeping the price of Bitcoin below $62K

Bears are keeping the price of Bitcoin below $62K

On November 4th the price of Bitcoin dropped to $60,700.  The bears are trying to keep the price under $62,000 to profit from the options expiry on Nov. 5.

The United States Securities and Exchange Commission’s (SEC) recent exchange-traded fund (ETF) approval was one of the main factors fueling the Bitcoin value. The estimates show that up to 90% of profit in Bitcoin was due to this exchange approval.  After the announcement of the approval, ProShares’ Bitcoin Strategy ETF (BITO) gathered around $1.1 billion in assets.  

The U.S. Treasury revealed the stablecoins report On Nov. 1. This report was a signal for Congress to regulate the industry. Under the expected regulations, the stablecoin issuers are required to meet the same standards as insured depository institutions.

The impact that this policy change can have on the market of cryptocurrencies is still not estimated. However, stablecoins are considered to be vital for exchange transactions, market makers, and retail investors.

Previous to the $1.15 billion options expiry, Bitcoins faced resistance at the $62,000 to $63,000 range.

There exist a few factors that could have caused the bulls excessively optimistic for the market, one of them is the launch of ETF. This launch has led to the $68,000 and higher bets for the Nov. 5 expiry.

Expectations are that if Bitcoin’s price remains above $60,000 level at 8:00 am UTC on November 5th, then around $70 million worth of put options will be available at the expiry. In which case, the bears need sub-$62,000 to balance the scales.

What will happen?

The 4 most likely outcomes of the November 5th expiry are as follows.

  • The range between $58,000 and $60,000: 270 sells vs. 1,800 buys. The net outcome would be in favor of the bears by $90 million.
  • The range between $60,000 and $62,000: 630 sells vs. 350 buys. The net outcome would be in favor of bears by $15 million.
  • The range between $62,000 and $64,000: 1,560 sells vs. 370 buys. The net outcome would be in favor of bulls by $75 million.
  • The range above $64,000: 2,890 buys vs. 100 sells. The net outcome would be the complete dominance of bulls by profiting $175 million.

The estimates mentioned above consider buying options used in bullish strategies and selling options only in neutral and bearish trades.

 This is while a trader could sell a selling option, that would gain him a positive exposure to Bitcoin above a specific price.