Key takeaway:
Bitcoin (BTC) traders are closely watching the $20 billion monthly options expiry set for Friday. Although Bitcoin is down 1.5% over the past 30 days, traders who used options to hedge against downside risk were already bracing for a steeper decline.
This recent price recovery may give bulls a key opportunity to solidify support at $105,000, a level that could prove decisive in the push toward a new all-time high in the coming weeks.
Currently, open interest for call (buy) options stands at $11.2 billion, compared with $8.8 billion for put (sell) options. Notably, $7.1 billion of those put options have strike prices at $101,000 or lower. As a result, the advantage has shifted markedly in favor of bullish bets.
Bitcoin bears’ best shot relies on increasing uncertainty
Some market observers attribute Bitcoin’s strength to a more dovish tone from US Federal Reserve Chair Jerome Powell. In his semiannual testimony Tuesday before the House Committee on Financial Services, Powell said “many paths are possible” regarding interest rates, including “cutting sooner” if inflation remains subdued.
Other Fed officials, including Governors Michelle Bowman and Chris Waller, have indicated they expect rate cuts as early as the Fed’s July policy meeting, citing recent data that suggest inflationary pressures are under control, according to Yahoo Finance. Meanwhile, the S&P 500 index has climbed to its highest level in over four months.
Bitcoin bulls view these stock market gains as an early signal that investors currently in short-term government bonds may soon pivot toward riskier assets in search of higher returns. This thesis is reinforced as analysts project a modest 5% S&P 500 revenue growth for 2025.
Therefore, even if central banks refrain from expanding the monetary base in the near term, declining yields on fixed income instruments could still fuel Bitcoin’s upward momentum. As the options’ expiry approaches, the most effective bearish scenario would require heightened uncertainty, stemming from a drop in hashrate or geopolitical instability, such as rising tensions in the Middle East.
Related: June remains Bitcoin’s danger zone, while S&P 500 eyes summer rally
Bitcoin bulls will have an edge if BTC price passes $90,000
Below are five probable scenarios based on current price trends. These outcomes estimate theoretical profits based on open interest imbalances but exclude complex strategies, such as selling put options to gain upside price exposure.
Between $100,000 and $101,500: $1.74 billion calls vs. $1.75 billion puts, a balanced result.
Between $101,500 and $102,500: $1.86 billion calls vs. $1.62 billion puts, favoring calls by $235 million.
Between $102,500 and $104,500: $1.93 billion calls vs. $1.18 billion puts, favoring calls by $750 million.
Between $104,500 and $106,000: $2.47 billion calls vs. $1.06 billion puts, favoring calls by $1.41 billion.
Between $106,000 and $108,000: $2.84 billion calls vs. $750 million puts, favoring calls by $2.1 billion.
To minimize losses, bears must force Bitcoin below $101,500 by Friday, a 5% decline from the current $107,300. On the other hand, bulls can strengthen their position by keeping the price above $106,000, potentially setting the stage for a July rally, especially if spot Bitcoin exchange-traded funds (ETFs) inflows persist.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
