Here’s why bears hope to pin Bitcoin under $60K ahead of Friday’s $1.1B options expiry

November 17, 2021 Coin Telegraph

Here’s why bears hope to pin Bitcoin under K ahead of Friday’s .1B options expiry

Last week, bulls had a $715 million advantage when Bitcoin price was above $68,000, but the current downturn gives bears a chance to turn the tables.

Bitcoin (BTC) bulls were euphoric when the price soared to $69,000 on Nov. 10 because the 14.5% gain accumulated over five days meant they were in for a $715 million profit on Nov. 12's options expiry.

However, the 9% negative price move on Nov. 16 caught bulls by surprise, especially since most of the call (buy) options for Nov. 19 have been placed at $66,000 or higher. Curiously, that price level has been the exception rather than the norm.

*Bitcoin/USD price on FTX. Source: TradingView*

Bears might have been lucky because the two negative events happened in the past few days. On Nov. 12, the United States Securities and Exchange Commission denied VanEck’s spot Bitcoin ETF request. But more important than the rejection, itself, which was largely expected, was the rationale behind the decision.

The SEC explicitly mentioned their uncertainties about Tether’s (USDT) stablecoin and the lack of ability to deter fraud and market manipulation in Bitcoin trading. Bloomberg senior ETF analyst and cryptocurrency expert Eric Balchunas had already given a 1% chance for approval so the denial wasn’t really a surprise.

Moreover, on Nov. 15, U.S. President Joe Biden sanctioned the infrastructure bill , which mandates that starting in 2024, digital asset transactions worth more than $10,000 be reported to the Internal Revenue Service.

Considering the above scenario, bulls are likely to regret their lack of more conservative bets on Nov. 19’s $1.1-billion weekly options expiry.

*Bitcoin options aggregate open interest for Nov. 19. Source: Bybt*

At first sight, the $630 million call (buy) options dominate the weekly expiry by 35% compared to the $470 million put (sell) instruments. Still, the 1.35 call-to-put ratio is deceptive because the recent price crash will probably wipe out most bullish bets.

For example, if Bitcoin’s price remains below $62,000 at 8:00 am UTC on Nov. 19, only $68 million worth of those call (buy) options will be available at the expiry. For example, there is no value in the right to buy Bitcoin at $64,000 if it’s trading below that price.

Bears have their eyes set on prices below $60,000

Listed below are the four most likely scenarios for the $1.1-billion Nov. 19 expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

Between $58,000 and $60,000: 10 calls vs. 3,840 puts. The net result is $220 million favoring the put (bear) options.
Between $60,000 and $62,000: 910 calls vs. 1,950 puts. The net result is $60 million favoring the put (bear) instruments.
Between $62,000 and $64,000: 2,030 calls vs. 940 puts. The net result is $70 million favoring the call (bull) options.
Above $64,000: 2,920 calls vs. 240 puts. The net result is $175 million favoring the call (bull) instruments.

This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. However, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin (BTC) above a specific price. But, unfortunately, there’s no easy way to estimate this effect.

Bulls need a 6% price hike to turn the tables

The only way for bulls to profit a significant amount on Nov. 19’s expiry is by pushing Bitcoin’s price above $64,000, which is 6% away from the current $60,400. If the current short-term negative sentiment prevails, bears could exert some pressure and try to score up to $220 million in profit if Bitcoin price stays closer to $58,000.

Currently, options markets data slightly favor the put (sell) options, slightly reducing the odds of a rally ahead of Nov. 19.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Los Angeles Angels’ Shohei Ohtani Joins FTX’s Global Ambassadors, MLB Superstar to Be Paid in Crypto

November 17, 2021 Bitcoin.com

Fresh Bitcoin price highs put bulls in profit for Friday’s $1.2B BTC options expiry

November 10, 2021 Coin Telegraph

Fresh Bitcoin price highs put bulls in profit for Friday’s .2B BTC options expiry

CitiBank

Bitcoin’s surge to $69,000 took bears by surprise and cemented bulls expected $400 million profit at Friday’s $1.2 billion options expiry.

Every time a new Bitcoin (BTC) all-time high is formed, excessive expectations follow. This time was no different as its price briefly touched $69,000 in the early hours of Nov. 9.

Bitcoin 8h, we got our November 9th historical correction, seems to be very minor for now. Naturally I expect at bigger correction after we hit the 84k region, and then into blast off.$BTC #Crypto #Bitcoin pic.twitter.com/cfbBkOIFEK
— Miles J Creative (@JohalMiles) November 9, 2021

Words are just words, so there’s no loss from being excessively bullish or bearish, but in options markets there’s a cost for placing those bets. For example, on Nov. 10, a right to buy Bitcoin (call option) at $100,000 on Dec. 31 is trading at BTC 0.022, or $1,460. For this privilege the investor pays an upfront fee which is also known as the premium.

Analysts and pundits quickly issue their $100,000 targets after Bitcoin posts its highest monthly close ever. However, history has proven that short-term price estimates seldom work, and it doesn’t matter if you’re an anonymous Twitter figure or a well-versed multi-million dollar crypto fund manager.

Bitcoin price estimates are often far off

Despite being a widely successful venture capital investor, Tim Draper’s $250k price guess for 2020 was off by 88%. Even renowned bank analysts can get it very wrong, as did a Citibank FX Wire “Market Commentary” from Nov. 2020 where they cited a potential $318k high in 2021. Still, with 50 days till year-end, maybe some of those prophecies will turn out true, but the majority remains no better than random numbers.

Bears are possibly eyeing regulatory hurdles, for example, Singapore became the latest region to ban crypto derivatives exchanges services. Huobi Global announced on Tuesday that it would shut down accounts of all Singapore-based users by the end of March 2022. In September, Thailand’s Securities and Exchange Commission also recommended revoking Huobi’s local operating license.

An initial analysis based on the open interest of call (buy) options and put (sell) instruments presents a balanced situation for Nov. 12’s $1.3 billion options expiry.

*Bitcoin options aggregate open interest for Nov. 12. Source: Bybt*

At first sight, the $630 million call (buy) options dominate the weekly expiry by a mere 12% compared to the $565 million puts (sell) instruments.

However, the 1.12 call-to-put ratio is deceptive because the recent rally will probably wipe out most bearish bets. For example, if Bitcoin's price remains above $66,000 at 8:00 am UTC on Nov. 12, virtually every put (sell) instrument becomes worthless. There is no value in a right to sell Bitcoin at $58,000 or $62,000 if it's trading above that price.

Bulls might aim for a $410 million profit above $70,000

Below are the four most likely scenarios for the Nov. 12 expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:

Between $64,000 and $66,000: 2,440 calls vs. 310 puts. The net result is $135 million favoring the call (bull) instruments.
Between $66,000 and $68,000: 3,430 calls vs. 50 puts. The net result is $225 million favoring the call (bull) instruments.
Between $68,000 and $70,000: 44,070 calls vs. 10 puts. The net result is $305 million favoring the call (bull) instruments.
Above $70,000: 5,820 calls vs. 0 puts. The net result is complete dominance, with bulls profiting $410 million.

This crude estimate considers call options being exclusively used in bullish bets while put options in neutral-to-bearish trades. This oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Unfortunately, there's no easy way to estimate this effect.

The bears' best hopes turned out to be ineffective

After a 19% rally in 30 days, bulls dominate Nov. 12's weekly expiry. One factor that may have been partially responsible for that move was the absence of an adverse price impact after the $1 trillion U.S. infrastructure bill passed the United States House of Representatives. The bill mandates all digital asset transactions worth more than $10,000 to be reported to the IRS.

Traders must consider that even bearish news has little to no impact on the price during bull runs. Moreover, the effort bears need to pressure the price is increased and usually ineffective.

Bulls might take advantage of the current situation by pushing BTC above $70,000, which would result in an additional $105 million estimated profit which would push their total to $410 million.

Google invests $1B in CME Group along with 10-year Cloud deal

November 4, 2021 Coin Telegraph

Google invests B in CME Group along with 10-year Cloud deal

Alphabet

CME Group chair and CEO Terry Duffy said the investment and partnership would help the company "transform derivatives markets through technology, expanding access and creating efficiencies for all market participants."

Google’s parent company Alphabet has made a $1 billion equity investment in the Chicago Mercantile Exchange Group, the exchange responsible for many crypto derivatives products.

In a Nov. 4 notice to investors, the CME Group announced the $1 billion investment from Alphabet in addition to a 10-year strategic partnership with Google Cloud aimed at accelerating the exchange’s move to the cloud and changing the way global derivatives markets operate. Google made the investment through the company’s nonvoting convertible preferred stock.

"Through this long-term partnership with Google Cloud, CME Group will transform derivatives markets through technology, expanding access and creating efficiencies for all market participants," said CME Group chair and CEO Terry Duffy. "This partnership will enable CME Group to bring new products and services to market faster.”

The CME Group was behind the first Bitcoin (BTC) futures contract launched in December 2017. Since that time, the exchange has continued expanding its offerings of crypto derivatives to include micro BTC futures, BTC options, and micro Ether (ETH) futures, expected to launch on Dec. 6.

According to data from CME Group, the average daily volume in its Bitcoin futures reached 6,243 contracts as of Nov. 3, with 13,417 open interest contracts. At the time of publication, the company's market capitalization is $79.8 billion, making it a significant player in the industry.

Friday’s $540M Ethereum options expiry favors traders with targets at $5K

November 3, 2021 Coin Telegraph

Friday’s 0M Ethereum options expiry favors traders with targets at K

Coin Telegraph

$540 million in ETH options expire on Friday and data shows bulls have a good chance at securing the $5,000 level.

Ether (ETH) bulls are probably very pleased with the 368% gains accrued so far in 2021 and it seems like not a day passes where the altcoin doesn’t hit a new all-time high.

Even with Ether on the path to $5,000, there are still plenty of concerns about the network's capability to absorb the strong demand coming from the decentralized finance (DeFi) and non-fungible token (NFT) sector.

Another potential setback laying ahead is the United States Treasury report on stablecoin regulation released on Nov 1. The report stressed the necessity of Congress to "ensure appropriate federal prudential oversight on a consistent and comprehensive basis."

In addition to this, competing networks offering interoperability with major DeFi projects have been gaining adoption, both in total value locked (TVL) and market share on smart contracts. As an example, this week Solana (SOL) rallied to a new $236 record high, surpassing Cardano (ADA) to become the fourth-largest cryptocurrency.

According to data from CryptoSlam, secondary sales of Solana NFT markets reached $495 million over the past three months but despite this, the Ethereum blockchain remains the most popular, with NFT secondary sales topping $1.76 billion in October.

*Ether price on Coinbase in USD. Source: TradingView*

By managing to stay ahead of the competition and creating a path to solve the scalability problem by migrating to a proof of stake network, Ethereum has lured some heavy investors. This includes Dallas Mavericks owner Mark Cuban, the Houston Firefighters' Relief and Retirement Fund, and billionaire Barry Sternlicht.

The November 5, $540 million Ether options expiry may appear to be an uncontested victory for bulls, but this wasn’t the case a couple weeks ago.

*Ether options aggregate open interest for Nov. 5. Source: Bybt*

At first sight, the $300 billion put (sell) options dominate the weekly expiry by 20% compared to the $240 million calls (buy) instruments. Still, the 0.80 call-to-put ratio is deceptive because the recent rally will likely wipe out most bearish bets.

For example, if Ether's price remains above $4,500 at 8:00 am UTC on Nov 5, only $1.5 million worth of those put (sell) options will be available at the expiry. There is no value in a right to sell Ether at $4,500 if it's trading above that price.

Bulls are comfortable above $4,500

Below are the four most likely scenarios for the $540 million Nov. 5 expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

Between $4,300 and $4,400: 6,870 calls vs. 6,000 puts. The net result is balanced between bulls and bears.
Between $4,400 and $4,600: 13,750 calls vs. 350 puts. The net result is $60 million favoring the call (bull) instruments.
Between $4,600 and $4,700: 18,500 calls vs. 50 puts. The net result is $85 million favoring the call (bull) instruments.
Above $4,700: 22,800 calls vs. 0 puts. The net result is complete dominance, with bulls profiting $107 million.

For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. But, unfortunately, there's no easy way to estimate this effect.

Bears need a 6% price correction to reduce their loss

The only way for bears to avoid loss on Friday's expiry is by pressuring Ether price below $4,400 on Nov. 5, down 6% from the current $4,660. So unless there is some concerning news or events announced before the weekly options deadline, bulls are likely to profit $85 million or higher.

Traders also have to factor in that during bull runs, the amount of effort a seller needs to impact the price is immense and usually ineffective. Currently, options markets data point to a considerable advantage from call (buy) options, fueling bullish bets for Ether and this increases expectations of a rally to $5,000.

Derivatives Exchange Giant CME Group Announces Micro Ethereum Futures Launch

November 2, 2021 Bitcoin.com

CME introduces micro Ether futures as ETH nears ATH above $4,4K

November 2, 2021 Coin Telegraph

CME introduces micro Ether futures as ETH nears ATH above ,4K

bitcoin futures

Micro Ether futures will become the fourth crypto derivatives product by CME and is expected to be launched on Dec. 6.

The Chicago Mercantile Exchange (CME), one of the world’s biggest derivatives marketplaces, continues expanding its cryptocurrency derivatives offerings by adding a new Ether (ETH)-based product.

CME announced Tuesday that it is planning to launch a micro Ether futures contract, sized at 0.1 ETH, enabling a new type of Ether exposure to institutional and individual traders.

The new product will become the fourth crypto derivatives product ever launched by CME and is expected to be rolled out on Dec. 6, 2021, pending regulatory approval.

The news comes amid Ether sitting near all-time high levels after the cryptocurrency posted its highest historical price on Friday, reaching $4,460. At the time of writing, the second-largest cryptocurrency by market cap is trading at $4,438, according to data from cryptocurrency tracking website CoinGecko.

Tim McCourt, CME Group Global head of alternative investment products, noted that the launch of micro ETH futures aims to bring more investors to the market by enabling smaller investments.

“Since the launch of Ether futures in February, we have seen steady growth in liquidity in these contracts, especially among institutional traders,” McCourt noted, adding that ETH price has “more than doubled” since these contracts were introduced.

“Micro Ether futures will offer even more choice and precision in how they trade Ether futures in a transparent, regulated and efficient manner at CME Group,” he added.

Micro Ether futures will join CME Group’s growing offering of crypto derivatives, including Micro Bitcoin futures, which started trading in May 2021. With each contract worth 0.1 BTC, the company has traded over 2.7 million contracts so far. The original and the first Bitcoin futures contract by CME was launched on Dec. 17, 2017.

Ethereum shillers call for $5K ETH, and this time derivatives data is backing them up

November 1, 2021 Coin Telegraph

Ethereum shillers call for K ETH, and this time derivatives data is backing them up

basis

Ether bulls have been calling for $5,000 ETH for years, and now derivatives data suggests that the price is finally realistic.

Ether (ETH) pundits have been shouting that the $5,000 price is 'programmed,' since 2018 and some go even further by calling for $20,000 over the long-term.

$5000 $ETH.

It is programmed.
— Koroush AK (@KoroushAK) October 29, 2021

A portion of these bullish calls are based on ETH 2.0 staking and the reduced inflation resulting from EIP-1559.

At this time in 2017, $BTC was around $2k

Just 7 months later it was almost $20k

What do you think happens when the world wakes up to the APR and deflationary aspect of $ETH that is coming in less than 2 months?

$20,000 is programmed IMO

This should be your largest position
— Don't Follow Shardi B If You Hate Money $ (@ShardiB2) May 16, 2021

The $20,000 estimate is equivalent to a $2.36 trillion market capitalization, and even if it is feasible, it still seems excessively optimistic for now.

Ether has entered an ascending channel on Sep. 20, which points to $5,000 becoming a support level by late Nov.

*Ether price in USD at Kraken. Source: TradingView*

Backing the recent strength is the net value locked growth, or adjusted TVL, on Ethereum network smart contracts. TVL measures the assets deposited on decentralized applications and is usually led by lending protocols and DEX exchanges.

*Ethereum network adjusted total value locked (TVL) in USD. Source: DeBank.com*

Ether’s TVL breached the previous $71 billion all-time high on Oct. 16, accumulating a 50% gain in three months until Oct. 31.

Adverse regulatory winds coming from the United States lawmakers could be driving investors away from cryptocurrencies. Many U.S. states, including Kentucky, Texas, Alabama, Vermont, New Jersey and most recently, New York, have been cracking down on crypto lending.

Furthermore, in October, New York-based decentralized prediction market Polymarket came under investigation from the United States Commodity Futures Trading Commission (CFTC). According to a Bloomberg report on Oct. 23, the agency is evaluating whether the decentralized finance (DeFi) application allows its customers to trade binary options and swaps without the necessary regulator approval.

On the other hand, some investors expect a positive movement from traditional markets to further boost the rally. Data shows that November has been the best performing month for the S&P 500 since 1985.

Pro traders believe ETH price will move higher

To confirm investors' confidence in the $5,000 prophecy coming true, one should monitor the monthly contract's premium, known as "basis." Unlike the perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will vastly differ from regular spot exchanges.

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Whenever there's excessive buyers optimism, the three-month futures contract will trade at a 15% or higher annualized premium (basis).

*Ether 3-month futures basis rate. Source: Laevitas.ch*

Notice how not even the 9.5% correction on ETH price on Oct. 27 from $4,300 to $3,900 was enough to break those traders' spirits. Currently, the basis rate stands at 17%, which signals moderate bullishness.

Options markets show moderate bullishness

Ether made an all-time high at $4,460 on Oct. 29 and to determine how optimistic traders are we have to look at the 25% delta skew. This indicator provides a reliable "fear and greed" analysis by comparing similar call (buy) and put (sell) options side by side.

The metric will turn positive when the neutral-to-bearish put options premium is higher than similar-risk call options. This situation is usually considered a "fear" scenario. On the other hand, a negative skew translates to a higher cost of upside protection and points toward bullishness.

*Deribit Ether 60-day options 25% delta skew. Source: laevitas.ch*

The above chart shows the indicator at negative 9, flirting with the "greed" momentum. That optimistic stance started on Oct. 18, which wasn't exactly a positive day for Ether because it tested the $3,700 support multiple times.

Both derivatives indicators sit on the edge of a neutral-to-bullish zone, which should be interpreted as highly positive as it leaves room for buyers' leverage using derivatives instruments.

According to futures and options metrics, perma-bulls calling for $5,000 are likely to be correct in the short term.

Bitcoin price descending channel and loss of momentum could turn $60K to resistance

October 31, 2021 Coin Telegraph

Bitcoin price descending channel and loss of momentum could turn K to resistance

bitcoin futures

After a slight hiccup in BTC futures premium, traders seem comfortable despite the $58,000 support retest and the risk of $60,000 turning to resistance.

Bitcoin (BTC) appears to lack the strength to retest the $67,000 all-time high that it reached on Oct. 20 and this is causing investors to question whether or not the bullish moment has faded. Even with the price facing these hurdles, it’s still premature to call the $58,000 support level test the beginning of a descending channel.

*Bitcoin price in USD at Coinbase. Source: TradingView*

Among the factors limiting the rally is the regulatory uncertainty in the United States. Anne Termine, a partner in the government enforcement and investigations practice at Bracewell LLP and former chief trial attorney at the Commodities Futures Trading Commission (CFTC), said that “there are no easy answers” for the agency to provide clear rules.

Increasing adoption, on the other hand, has been pressuring traditional banks to seek cryptocurrency product offerings. For example, major Russian private bank Tinkoff, owner of a large online brokerage services, is researching crypto-related investment services even though the Bank of Russia withholding such launches.

This week Coinbase exchange hit the top spot as the most downloaded app for the United Stated Apple Store, which is mind-blowing. Coinbase beat tech giants like TikTok, YouTube and Instagram and this is not a small feat. Coinbase first listed on the app store in 2014 and was the most popular download in the U.S. in 2017 and May 2021.

Pro traders stumbled but are bullish again

To determine how bullish or bearish professional traders are, one should monitor the futures premium — also known as the “basis rate.”

The indicator measures the difference between longer-term futures contracts and the current price at spot market exchanges. A 5% to 15% annualized premium is expected in healthy markets, otherwise known as contango.

This price gap is caused by participants demanding more money to withhold settlement longer, and a red alert emerges whenever this indicator fades or turns negative, known as “backwardation.”

*Bitcoin 3-month futures basis rate. Source: Laevitas.ch*

Notice how the sharp decrease caused by the $58,000 resistance test on Oct. 27 caused the annualized futures premium to reach its lowest level in three weeks. Still, the indicator recovered nicely to the current 17%, signaling a moderate bullishness.

To confirm whether this movement was specific to that instrument, one should also analyze options markets.

The 25% delta skew compares similar call (buy) and put (sell) options and will turn positive when “fear” is prevalent. That situation reflects the protective put options costing higher than similar risk call options.

The opposite movement holds when market makers are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.

*Deribit Bitcoin options 25% delta skew. Source: laevitas.ch*

The 25% delta skew has been ranging in the neutral zone since Sep. 30. The latest bottom on Oct. 25 was negative 6%, not enough to be considered moderate bullishness. However, not even Bitcoin’s 12.5% correction from $66,600 on Oct. 21 to $58,200 on Oct. 28 was enough to inflict fear on professional traders.

Although no bearish signs emerged from the Bitcoin derivatives market, bulls should worry about the potential descending channel starting on Oct. 19. If that movement gets further confirmation, traders should expect $60,000 to become a resistance by Nov. 12.

There are no stress signs currently from professional traders, so a correction after a 63% rally in three weeks that led to the $67,000 all-time high on Oct. 20 should not be problematic.

Data shows Ethereum bulls expect a new ATH after Friday’s $1.25B ETH options expiry

October 28, 2021 Coin Telegraph

Data shows Ethereum bulls expect a new ATH after Friday’s .25B ETH options expiry

Altair

ETH price is on the cusp of a new all-time high and derivatives data shows bulls may attempt to capture it ahead of Oct. 29’s $1.25 billion Ethereum options expiry.

Ether (ETH) has gained 950% in 2021 and from the look of things, the altcoin has no intention of stopping. This can also be seen in the ultra-optimistic bets for October’s $1.25 billion options expiry. However, this phenomenon is not exclusive to Ether bulls.

The right to acquire Ether at a fixed price in the future does not come at a cheap price. On Sep. 4, the $5,000 call option for Oct. monthly expiry was trading at ETH 0.082 which is equivalent to $320. Unfortunately, for the bulls, these options are now worthless.

Gas fees on Ethereum transactions are still above $25 and this will continue to favor competitor blockchains with their own decentralized finance (DeFi) and nonfungible token (NFT) markets. Even with these high fees, the leading smart contract network still holds 80% or higher total value locked (TVL) and decentralized exchanges (DEX) volumes.

*Ether price at Coinbase in USD. Source: TradingView*

The bullish trend that initiated on Sep. 21 has been driving Ether price on a path to break its $4,380 all-time high in a couple of weeks.

Furthermore, Ether bulls will also be pleased to know that ETH 2.0's Altair upgrade was successful, with 99% of the nodes upgraded. This is the first upgrade since the Beacon Chain went online in December 2020 and the main changes include support for lightweight nodes and increased penalties for validators being offline.

Bulls were too optimistic, but they're still ahead

Based on the bullish expectations surrounding a Bitcoin (BTC) exchange-traded fund approval, it is now possible to understand why bulls placed 55% of their bets at $4,500 or higher. However, as the deadline for Oct. 29 expiry approaches, these call (buy) options quickly lost their value.

The October monthly expiry will be a strength test for bears because any price above $4,000 means a $205 million or higher profit for the bulls.

*Ether options aggregate open interest for Oct. 29. Source: Bybt*

As the above data shows, bears placed $535 million in bets for Oct. 29's expiry, but it appears that they were caught by surprise, as 96% of the put (sell) options are likely to become worthless.

In other words, if Ether remains above $4,100 on Friday's 8:00 am UTC expiry, only $12 million worth of neutral-to-bearish put options will be activated.

Bulls have a few reasons to keep Ether price above $4,200

Below are the four most likely scenarios for the Oct. 29 expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

Between $3,900 and $4,000: 35,100 calls vs. 9,800 puts. The net result is $100 million favoring the call (bull) instruments.
Between $4,000 and $4,200: 54,900 calls vs. 3,600 puts. The net result is $205 million favoring the call (bull) instruments.
Above $4,200: 66,300 calls vs. 600 puts. The net result is $275 million favoring the call (bull) instruments.

This raw estimate considers call options being exclusively used in bullish bets and put options in neutral-to-bearish trades. However, investors might have used a more complex strategy that typically involves different expiry dates.

Bears need a 7% price correction to reduce their losses

In each scenario, bulls have absolute control of this Oct. 29's expiry and there is good reason for them to keep the price above $4,200. On the other hand, bears need a 7% negative move from $4,270 to sub-$4,000 to avoid a loss of $205 million or higher.

Nevertheless, traders must remember that during bull runs, the amount of effort a seller needs to pressure the price is immense and usually ineffective. Moreover, derivatives data shows a considerable short-term advantage from call (buy) options that is fueling even more bullish bets for next week.

derivatives