A total of 106,000 Bitcoin (BTC) futures and contracts have expired today, which leads to this Investors are excited to see how the BTC price can react before and after it expires.
The bears hadn’t anticipated the recent rally at $ 11,000, especially after two months of side trading.. The 52% increase in total open interest rise in bitcoin futures in July indicates that sellers are too confident or are mainly using it for hedging and arbitrage opportunities.
Aggregated open interest in bitcoin futures. Source: Skew
Earlier data shows that total open futures interest exceeds $ 5.2 billion, just 3% less than its historic high in mid-February. While this figure may seem daunting, the truth is that less than $ 500 million has expired today.
Bitcoin’s options were somewhat more worrying as 32% of the day before, a total of $ 2.1 billion was due in open positions. In contrast to futures markets Extending options in the last few trading days has little benefit.
Options contracts have the mechanics of a “winner that takes up the entire market” because those who are under water are considered useless. As for the $ 1.4 billion open positions that have not expired today, the big question is how bullish / bearish they are.
The open positions for futures remain unchanged after gains of 18%.
The average use of leverage in BitMEX exceeds 20 times. This means that a 10% move should be enough to liquidate 60% of traders as the margin is insufficient for their risk.
Bitcoin BTC Eternal Settlements. Source: Skew
The graph above shows a $ 27 million purchase transaction on July 27, despite a 12% price increase, indicating that these sellers had an unusually high margin.. This is a bullish indicator as most future contract sellers appear to be hedged.
The option markets remain optimistic
Open interest in Bitcoin options after maturity. Source: Skew
Open positions for bitcoin options decreased $ 690 million today, leaving 60% of the remaining $ 1.4 billion in August and September. It is even more important to understand the impact on the put / call relationship. This metric provides an excellent indicator of the mood of professional traders.
Bitcoin put / call options index. Source: Skew
Based on the graph above, the put / call ratio on July 30 before the expiration date was 63%. This indicates that the open positions for put options (bearish) were 37% lower than the call options (bullish). Preliminary data show that the indicator is currently at 69%. Despite remaining in the bullish area, the open interest in the remaining calendar shows somewhat less optimism.
The net result by maturity should be neutral
The futures markets are of course more balanced, since long and short contracts are always equivalent. By monitoring recent perpetual settlement activity, it can be concluded that most sellers are fully protected. Today, approximately $ 500 million has expired, which is less than 10% of the total open positions.
Indeed, The BTC option markets seem to favor bulls, and as mentioned above, the recent rise in Bitcoin (BTC) prices surprised many bears.
Investors should closely monitor the 25% Delta Skew Options indicator and the number of futures contracts, as previously reported by Cointelegraph. Each of these indicators indicates whether there may be excessive bull activity.
The views and opinions expressed here are solely those of author and do not necessarily reflect Cointelegraph’s views. Every investment and trade movement involves risks. You have to do your own research when making a decision.