Key takeaways:
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Bitcoin bears hold strong incentives below $114,000, likely intensifying pressure ahead of the options expiry.
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AI-sector spending concerns add turbulence and weigh on investors’ broader risk appetite.
A total of $13.8 billion in Bitcoin (BTC) options are set to expire on Aug. 29, a moment many traders believe could determine whether the recent 9.7% correction marks the end of Bitcoin’s bull run or just a temporary pause. The drop to $112,100 on Thursday pushed Bitcoin to its lowest point in six weeks, intensifying bearish momentum ahead of the monthly options expiry.
Bullish Bitcoin strategies ill prepared for prices below $114,000
The $7.44 billion in open interest for call (buy) options stands 17% higher than the $6.37 billion in put (sell) contracts. Still, the actual outcome hinges on Bitcoin’s price at 8:00 am UTC on Aug. 29. Deribit dominates the market with an 85% share, followed by CME at 7% and OKX with 3%.
Bulls may have been overly confident, with some wagers set at $125,000 or higher. That optimism quickly eroded after Bitcoin’s decline, shifting momentum toward put instruments. Regardless of the rationale behind the recent BTC price correction, traders who opted for bullish strategies will likely come out disappointed.
Only 12% of call options were placed at $115,000 or below, leaving most out-of-the-money at current levels. By contrast, 21% of puts are positioned at $115,000 or higher, with significant clusters at $112,000. Thus, it is only natural to expect bears to continue negatively pressuring Bitcoin’s price ahead of the monthly expiry.
It might be too early to declare bullish options strategies entirely lost. Traders are awaiting comments from US Federal Reserve Chair Jerome Powell on Friday, as any suggestion of increased odds of rate cuts could support asset prices. Hotter-than-expected US jobless claims data on Thursday added to that anticipation, keeping macroeconomic uncertainty high.
Related: Why is Bitcoin crashing and will $112K be the final bottom?
US Federal Reserve and tech stocks could dictate Bitcoin’s outcome
Below are five probable scenarios at Deribit based on current price trends. These outcomes estimate theoretical profits based on open interest imbalances but exclude complex strategies, such as selling put options to gain upside price exposure.
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Between $105,000 and $110,000: $210 million in calls (buy) vs. $2.66 billion in puts (sell). The net result favors the put instruments by $2.45 billion.
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Between $110,100 and $114,000: $420 million calls vs. $1.94 billion puts, favoring puts by $1.5 billion.
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Between $114,100 and $116,000: $795 million calls vs. $1.15 billion puts, favoring puts by $360 million.
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Between $116,100 and $118,000: $1.3 billion calls vs. $830 million puts, favoring calls by $460 million.
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Between $118,100 and $120,000: $1.7 billion calls vs. $560 million puts, favoring calls by $1.1 billion.
For bullish strategies to gain traction, Bitcoin would need to trade above $116,000 by Aug. 29. Yet, the most critical battle lies at $114,000, where bears are most motivated to push prices lower.
Ultimately, Bitcoin’s fate in the $13.8 billion monthly options expiry will be decided by broader macroeconomic trends, including investors’ discomfort with the artificial intelligence sector. Concerns deepened after Morgan Stanley warned that soaring spending could limit major tech firms’ ability to fund share buybacks, amplifying caution in equity markets.
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.