Today the cryptocurrencies have opened the market on a bullish note as the major cryptocurrencies are all trading in green. Bitcoin, the currency that was hovering between the $37,000 and $39,000 range for a month, in the early hours today the flagship currency did reclaim the $40,000 range.
However, at the time of writing, Bitcoin Price has slipped below $40,000 trading at $39,623 with an increase of 3.88% over the last 24hrs.
What To Expect With the Options Expire on May 6 ?
It’s been more than two months that the firstborn currency is stuck in the falling wedge pattern and this is the time when Bitcoin had to test $37,600 support multiple times.
When seen year-to-date, Bitcoin is down by 16% which is similar to the Russell 2000s performance.
The main reason for Bitcoin’s present price action is the investor’s concern about the diminishing macroeconomic situation. The professional investors are more concerned about the effect of the US Federal Reserve’s tightening economic policies.
Paul Tudor, a billionaire hedge fund manager, recently claimed that as the monetary authority is increasing interest rates due to falling financial conditions, the current environment for investors is not favorable.
The option expiry on May 6 in Bitcoin is positioned at $735 million. However, this figure is expected to be lowered as the currency is trading below the $40,000 range.
The 1.22 call-to-put ratio reveals that $405 million calls (buy) open interest is against $330 million puts (sell) options.
Hence, if the Bitcoin price does not improve and remains below $39,000 even on May 6, then the bears will get $100 million worth of these put(sell) options accessible to them. This difference pops up, there is no point in selling Bitcoin at $36,000 if the currency trades above this level during expiry.
$145 Million Profit For Bears
Depending on the expiry price, the number of options contracts available for call (buy) and put (sell) instruments will differ on May 6.
Hence, Bitcoin bears need to hold on below $39,000 tomorrow, May 6 in order to secure a $145 million profit. Meanwhile, bulls can take up the control and avoid losses by pushing the price above $40,000 and easily acquire gains of around $100 million.