$14B Monthly Bitcoin Options Expiry Puts A Cap On BTC Price

Key takeaways:

Friday’s $14 billion BTC options expiry favors neutral-to-bearish bets as most call (buy) strikes sit above $91,000, increasing pressure on bulls.

Bitcoin traders added year-end call options near $100,000 despite recent losses, showing that bullish expectations persist.

Bitcoin (BTC) price dropped on Tuesday after failing to hold the $89,200 level reached the previous day. Traders are increasingly concerned that Friday’s $14 billion BTC options expiry may reinforce bearish sentiment following weaker private employment data and a decline in US consumer confidence.

The aggregate BTC call (buy) options open interest stands at 104,300 BTC, valued at $9.12 billion at current prices. Yet the recent 23% decline in Bitcoin over 30 days caught bulls off guard, as 84% of these positions were placed above $91,000. These contracts are set to expire worthless if the spot price remains near current levels.

Put (sell) options open interest totals 67,877 BTC, or $5.92 billion. Despite being 35% smaller than call open interest, put positions appear better aligned with prevailing market conditions, with 31% set at $84,500 or lower. Thus, even if Bitcoin recovers part of its recent losses by Nov. 28, probabilities favor neutral-to-bearish outcomes.

Risk sentiment deteriorated further after payroll processor ADP reported on Tuesday that US private companies shed an average of 13,500 jobs per week during the past four weeks. Labor market weakness poses an additional challenge for a consumer-driven economy.

Investors’ sentiment weakened further after the US Conference Board reported that consumer confidence fell to 88.7 in November, down from 95.5 in the previous month. Expectations for income and business also dropped, remaining well below the 80% neutral threshold for the tenth straight month, according to Yahoo Finance.

Weak economic data increases hopes for Fed intervention

Although deteriorating economic indicators weigh on investor expectations, they also raise the likelihood of the Federal Reserve adopting a less restrictive monetary stance. Gold rose 1.2% and the Russell 2000 small-cap index gained 1.9% as traders anticipated additional liquidity measures from the US Treasury to help stabilize the economy.

On Monday, US President Donald Trump signed the “Genesis Mission” executive order aimed at accelerating artificial intelligence development and reducing perceived risks tied to energy shortages and long-term financing needs, as large-scale high-performance computing facilities could strain credit markets.

Bitcoin traders responded by increasing year-end call option positions in the $100,000 to $112,000 range over the past 48 hours, signaling that medium-term optimism persists despite the recent price weakness.

Related: Bitcoin short-squeeze to $90K possible as funding rates turn negative

$89,000 is the key level to decide Bitcoin’s momentum

Below are five probable scenarios for the November BTC options expiry based on current price trends:

Between $85,000 and $87,000: The net result favors the put (sell) instruments by $1.9 billion.

Between $87,001 and $88,000: The net result favors the put (sell) instruments by $800 million.

Between $88,001 and $89,000: Balanced outcome between call and put options.

Between $89,001 and $90,000: The net result favors the call (buy) instruments by $600 million.

Between $90,001 and $92,000: The net result favors the call (buy) instruments by $3.8 billion.

It may be premature to dismiss bullish BTC options strategies outright. Investors’ sentiment remains closely tied to macroeconomic conditions and expectations of potential stimulus efforts by central banks worldwide.

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.