Bitcoin prices fell sharply over the course of two days, testing the $15,500 support level. The decline amounted to 7.3%. The small correction in the market has caused $230 million in liquidations in futures contracts. This is a significant amount of money, and it shows that the market is still unstable. As a result, bulls who were using leverage were not ready for the $1.14 billion monthly options expiry on Nov. 25.
Bitcoin investors became more pessimistic after Genesis Trading stopped making payments from its crypto lending division on Nov. 16. The DCG company owns the Grayscale fund management company, which is responsible for the largest institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC). This makes DCG a very important player in the Bitcoin world.
Bitcoin miner Core Scientific has warned that it may not be able to continue operating over the next 12 months due to financial uncertainty. In its quarterly report filed with the United States Securities and Exchange Commission (SEC) on Nov. 22, the firm reported a net loss of $434.8 million in the third quarter of the year. This was a significant loss for the company, indicating that it is struggling financially.
The attorney general of New York, Letitia James, has recommended that members of Congress should not allow the purchase of cryptocurrencies using funds from IRAs and other retirement plans.
Since November 11, Bitcoin has not been able to close at a price above $17,000 per day, despite bulls’ best efforts. This movement indicates that the $1.14 billion Bitcoin monthly options expiry on Nov. 25 could be advantageous for bears despite the 6% rally from the $15,500 bottom.
Many people are betting that the stock will go above $18,000.
After Bitcoin failed to break the $21,500 resistance on Nov. 5, the subsequent 27.4% correction surprised bulls. This is because only 17% of monthly call (buy) options were placed below $18,000. Bears are in a better position even though they gambled less.
More people are betting that the stock will go up than down. Nevertheless, as Bitcoin is down 20% in November, most bullish bets will likely become worthless.
If the price of Bitcoin remains below $17,000 at 8:00 am UTC on Nov. 25, then only $53 million worth of call (buy) options will be available. The reason the difference exists is because there’s no point in having the right to buy Bitcoin if it’s trading below $17,000 when the contract expires.
Bears could make a lot of money – over $200 million!
There are four possible outcomes based on the current situation. The number of call and put options contracts available on Nov. 25 varies depending on the expiry price. If one side has more than the other, that’s called a profit.
- The difference between $15,000 and $16,000 is 200 calls versus 16,000 puts. The net result of the plan is that it will favor bears by giving them an extra $245 million.
- There are 3,200 calls and 11,900 puts between $16,000 and $17,000. The end result is that bears will have an extra $145 million.
- Between $17,000 and $18,000: 5,600 calls vs. 8,800 puts. Bears remain in control, profiting $55 million.
- There were 9,100 calls and 6,500 puts between $18,000 and $18,500. The net result favors bulls by $50 million.
