Back to main

Bitcoin Bulls Face Tough Battle Ahead of $6.5 Billion Options Expiry Amid High Hopes and External Influences

Bitcoin investors are known for their bullish outlook, and despite multiple failed attempts to sustain prices above $71,000, derivatives betting on $80,000 and $90,000 continue to rise.

This is driven by expectations of high-volatility events such as geopolitical tensions, socio-political changes, U.S. presidential support, and increased corporate adoption of Bitcoin.

Bitcoin bulls were overly optimistic, betting on $72,000 or higher

Bitcoin’s $6.5 billion options expiry on May 31 is a prime example.

Bulls’ failure to break the $70,000 resistance over the past week suggests these optimistic call (buy) options may become worthless.

Notably, 91% of these instruments were placed at $72,000 or higher, indicating a reliance on a sustained rally before May 31.

As the deadline nears, it appears Bitcoin bears may avoid significant losses.

Contrary to Bitcoin-only investor beliefs, BTC’s price is influenced by external factors like monetary policies, economic trends, inflation, unemployment, and confidence in the government’s bond-issuing capability.

Regardless of Bitcoin’s temporary correlation with the stock market and gold, investors usually hold cash and short-term U.S. Treasury bonds when market fear prevails.

The Nasdaq Composite index hitting an all-time high above 17,000 points on May 28 shows investor confidence in the U.S. Federal Reserve’s soft landing plan.

This plan aims for inflation to return to its 2% target while maintaining favorable corporate earnings.

This scenario boosts the outlook for risk-on assets, including Bitcoin, as reduced interest rates are expected.

The optimistic bets for Bitcoin’s monthly options expiry at 8:00 am UTC on May 31 reflect the 25% gains as BTC soared from $56,883 to $71,417 in early May.

However, this rally was unsustainable, especially after the approval of the spot Ethereum exchange-traded fund (ETF) in the U.S., creating competition for institutional funds.

Aggregate data predicts a $270 million profit for bulls if BTC trades above $70,000
To understand the odds for each BTC expiry price level, analyzing the open interest of calls (buy) and puts (sell) is essential.

READ MORE: AI Project Worldcoin Faces Scrutiny Over Biometric Data Collection Amid Privacy Concerns

Call options dominate with a 70% higher notional value, but Deribit’s $4.62 billion open interest will likely be much lower if BTC trades below $70,000 on May 31.

Similarly, put option investors will be disappointed if Bitcoin remains near $67,800, as only 5% of those $1.7 billion contracts were placed at $68,000 or higher.

Deribit leads the options market with a 71% market share of Bitcoin’s monthly open interest in May. However, aggregate data from various exchanges show different investor profiles.

The Chicago Mercantile Exchange (CME) is the second-largest player with $745 million, followed by OKX with $600 million. Binance and Bybit totaled $315 million and $160 million, respectively.

If Bitcoin stays near $67,800 on May 31, the aggregate open interest for call options will be $135 million, while put options at $68,000 will amount to $145 million.

This level is fairly balanced, but both bulls and bears have incentives to influence the price before expiry.

For instance, a $65,900 price would favor put options by $95 million, while an expiry at $70,000 or higher would give call options a $270 million advantage.

With less than three days until expiry, it seems unlikely bulls will push Bitcoin’s price above $70,000 without short-term catalysts, favoring a neutral outcome near $68,000.


To submit a crypto press release (PR), send an email to [email protected].

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Read on Crypto Intelligence Investment Disclaimer