Bitcoin

investors are bracing themselves for a massive $16.5 billion monthly options expiry on March 28. However, don’t expect fireworks just yet – market watchers believe the actual impact might be less dramatic than the headline number suggests. Why? Bitcoin unexpectedly dipped below $90,000, throwing a wrench in the gears of many bullish bets and essentially making them worthless.

This sudden market twist has handed Bitcoin bears a golden opportunity to potentially dodge a hefty $3 billion loss. This could be a key factor in shaping how the market behaves in the weeks ahead.

Looking at the numbers, call (buy) options are leading the pack with a total open interest of $10.5 billion, while put (sell) options are trailing behind at $6 billion. However, here’s the catch: a significant $7.6 billion of those call options are pegged at a lofty $92,000 or higher. This means Bitcoin would need to jump by at least 6.4% from its current price just to make these options profitable by the March 28 deadline. Consequently, the strong advantage that bullish traders once held has noticeably diminished.

Bitcoin bulls are hoping for a market “decoupling” if central banks restart QE 

Some market analysts point to the ongoing global trade tensions and US government spending cuts as reasons behind Bitcoin’s recent lackluster performance. These factors are raising concerns about a potential economic slowdown. Traders are particularly worried about slower growth in sectors like artificial intelligence, which previously powered the S&P 500 to a record high on February 19th, before it then experienced a 7% drop.

Despite the gloomy economic outlook, Bitcoin bulls haven’t given up hope. They’re banking on Bitcoin “decoupling” from the stock market, even though the correlation between the two has remained above a strong 70% since the start of March. Their optimism is fueled by the expectation of central banks expanding the money supply again, coupled with increasing Bitcoin adoption from companies like GameStop (GME), Rumble (RUM), Metaplanet (TYO:3350), and Semler Scientific (SMLR).

As the options expiry date gets closer, both bulls and bears are highly motivated to sway Bitcoin’s spot price to their advantage. Bulls are aiming high, hoping to push prices above $92,000, but wishful thinking alone won’t guarantee BTC reaches that target. It’s worth noting that Deribit dominates the options market, holding a massive 74% share, followed by the Chicago Mercantile Exchange (CME) at 8.5% and Binance at 8%.

Considering the current market landscape, Bitcoin bulls appear to have a slight strategic edge as we approach the monthly options expiry. For example, if Bitcoin stays around $86,500 by 8:00 am UTC on March 28th, only about $2 billion worth of put (sell) options would be in the money. This scenario gives bears a strong incentive to try and push Bitcoin’s price down below $84,000, which would increase the value of profitable put options to $2.6 billion.

Related: Would GameStop buying Bitcoin help BTC price hit $200K?

Bitcoin bulls will gain a stronger advantage if BTC price climbs above $90,000

Let’s explore five possible scenarios based on the current price trends. These scenarios are estimates of potential theoretical profits derived from open interest imbalances. Keep in mind, they don’t account for more complex trading strategies, such as selling put options to gain upside price exposure.

• Between $81,000 and $85,000: Here, $2.7 billion in call (buy) options are in play versus $2.6 billion in put (sell) options. The slight advantage here goes to call options by a margin of $100 million.

• Between $85,000 and $88,000: In this range, we see $3.3 billion in calls compared to $2 billion in puts, with call options holding a more significant $1.3 billion advantage.

• Between $88,000 and $90,000: Here, call options are at $3.4 billion, while puts are at $1.8 billion, further extending the call options’ lead to $1.6 billion.

• Between $90,000 and $92,000: If the price reaches this level, call options dominate at $4.4 billion versus just $1.4 billion for put options, giving call options a substantial $3 billion advantage.

To minimize their potential losses, bears need to drive Bitcoin’s price down below $84,000 – a 3% dip – before the March 28th expiry. Such a move would increase the value of their put (sell) options, strengthening their overall market position. 

On the flip side, bulls can maximize their potential profits by pushing BTC above $90,000. Achieving this could create enough positive momentum to establish a bullish trend heading into April, especially if we see a strong resurgence of inflows into spot Bitcoin exchange-traded funds (ETFs).

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.

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