Bulls and bears fight over $34K Bitcoin price as $445M options expiry looms
Last week, Wall Street’s CoinDesk reported on the price of Bitcoin, saying it had hit a six-month high of $3,474.88. But that’s not the whole story. Bitcoin’s price surged past $4,000 on Monday, and has been holding steady at just under $3,000. That’s still a huge hike from the $1,000 price it reached in early January, but it’s also just a tiny fraction of its all-time high of nearly $20,000 in December.
Bitcoin bulls and bears are battling it out over the $34K Bitcoin price as an option to buy or sell the cryptocurrency before it expires. The option to buy a $34,000 Bitcoin before it expires, at $445,000, expires on December 28, 2017. The extension is a set of 2017 options that were granted by the parent company, Circle, which currently owns a 17 percent stake in the popular digital currency.
In the past few weeks, we’ve seen a dramatic increase in the Bitcoin price, with a bunch of five-figure profits for those who bet on the top cryptocurrency. But is it a real rally or a bubble that will burst? We’ll explore how the Bitcoin price is growing.. Read more about bitcoin price history and let us know what you think. Over the past 12 days, the price of bitcoin (BTC) has fluctuated between $30,400 and $36,400 and it has been difficult to determine the exact reason for the lack of investor interest. Some analysts point out that the unlocking of the Grayscale Bitcoin Trust (GBTC) in mid-July finally allowed institutional investors to unload their funds, but that’s hardly the main reason.
Meanwhile, industry leaders have suggested that the crackdown on cryptocurrency regulation in the US is having a major impact on investor sentiment, a view that is especially problematic given China’s recent ban on all cryptocurrency mining activity in the country.
Finally, prominent bitcoin critics, including Aswat Damodaran, professor of finance at New York University’s Stern School of Business, claim that the crypto currency has failed as a currency.
Damodaran points to the limited use of microtransactions in Bitcoin, though El Salvador is working on a plan to democratize the Lightning Network solution.
Bulls tend to win at weekly expiration
After the bears prevailed in Friday’s recent $3 billion quarterly option exercise, the winds may have turned in favor of the bulls this time around. While last week’s $34,000 level represented a $310 million advantage for cash-neutral puts, next Friday’s July, $2,000 level is quite different.
Cumulative open interest in bitcoin options for the 2nd quarter. July. Source: Bybt
The initial picture shows a neutral structure, with open interest in call options prevailing from neutral to positive at 8%, in line with the call-put ratio. Of the $445 million in open interest, $230 million call is neutral, giving a slight bullish advantage. However, examination of more detailed data provides a different perspective.
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Only 18% of protective puts were placed on strikes of $33,000 or more. So if bitcoin trades above this level at 8:00 GMT on Friday, these downwardly neutral instruments will only account for $38 million.
$34,000 – Draw or break for both sides
On the other hand, bulls will likely try to defend the $34,000 level, bringing the open call (call) interest to $45 million.
To be fair, both sides have incentives to break this reasonable balance at $34,000. At a price over $35,000, for example, the advantage of bulls increased from $7 million to $57 million.
Conversely, the bears will be at an advantage if bitcoin quotes below $33,000. In this case, the open interest of the protective puts is $31 million higher than that of the bullish-neutral calls.
In short, it is impossible to predict which side will be stronger at the end of Friday’s expiration. But for the first time in four weeks, the Bulls have a fighting chance.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.If you’re a newbie to Bitcoin or the world of altcoins, you might be wondering why everyone is so freaked out at the moment. As the second-largest cryptocurrency by market cap, Bitcoin is a big deal. And when prices are rising rapidly, everyone is going to be looking to get in on the action. But while all this excitement is an amazing sight to behold, it’s also potentially dangerous.. Read more about xrp price and let us know what you think.