Crypto Bitcoin Bears Push Price Below $30K Before Friday’s Expiry

This week’s

Crypto Bitcoin

Bears the Upper Hand

Options expiries of Bitcoin often coincide with volatility

Analysing Bitcoin’s price action in the recent period, we can observe that out of the last four expiries of BTC options, three of them caused considerable price fluctuations, making it essential for traders to pay attention to these events.

It is worth noting that Bitcoin’s price has habitually reacted significantly to the weekly 8:00 am UTC options expiry. Although it is hard to establish a causal link, the magnitude of these price movements requires extreme caution prior to the weekly expiry on July 21.

Bitcoin bears benefit from stricter regulations

As this week’s options expiry could potentially give bears the upper hand in Bitcoin’s price in the short term, bulls have the potential advantage of the United States Securities and Exchange Commission’s review of spot exchange-traded fund proposals.

In spite of the fact that these plans are still in their early stages of regulatory inspection, the sluggish progression could partially explain why the bears have managed to maintain $31,000 multiple times since late June.

However, their best chance of keeping Bitcoin’s price below $30,000 lies in the deteriorating regulatory environment. On July 19, the worldwide securities exchange Nasdaq put off the launch of its crypto custodian solution due to a lack of regulatory clarity in the United States. This change of plans was justified by Nasdaq’s CEO, Adena Friedman.

Also, on July 14, crypto exchange Coinbase declared the suspension of its staking services for clients in California, New Jersey, South Carolina and Wisconsin. This move followed a June 6 lawsuit from the SEC that accused the exchange of operating as an unregistered security broker since 2019.

Therefore, it is clear that the stricter regulations surrounding crypto and Bitcoin have been beneficial for the bears.

Bitcoin Bulls’ Overoptimism Results in a Disappointing Outcome

On July 13 and 14, Bitcoin’s price briefly exceeded $31,000, motivating traders to invest in call (buy) options contracts. However, a four-hour correction saw the price dip back to $30,000.

The 0.39 put-to-call ratio indicates the difference between the $430 million call options and the $170 million put options. The outcome will be lower than the $600 million total open interest due to the overconfidence of the bulls.

For example, if Bitcoin’s price trades at $30,500 at 8:00 am UTC on July 14, only $18 million worth of call options will be accounted for. This is because the right to purchase Bitcoin at $31,000 or $32,000 becomes invalid if BTC trades below those levels upon expiration.

The following three scenarios are the most likely based on the current price action. The number of options contracts available on July 21 for call (buy) and put (sell) instruments depends on the expiration price. The difference between the two sides represents the theoretical profit:

Given the recent weak macroeconomic indicators, it appears that the bears will continue to push down Bitcoin’s price until Friday’s expiry. Additionally, China’s second-quarter gross domestic product grew by 6.3% year-on-year, missing the 7.3% market expectation. Meanwhile, U.S. retail sales in June increased by 0.2% from the previous month, below the 0.50% consensus.

Therefore, the bulls are in a difficult situation, as their call (buy) options will be invalidated if Bitcoin’s expiry price drops below $30,000. Thus, the bears’ $35 million favorable outcome may not be a major win, but it does increase the chances of $30,000 becoming a new resistance crypto Bitcoin area.