A total of $9.25 billion worth of Bitcoin (BTC) options are scheduled to expire on the morning of June 28. June’s monthly expirations are particularly significant as they mark the end of the first half of 2024 and are historically the second-largest expirations across all markets. , including the traditional financial industry. Investors are particularly concerned after $3 trillion tech giant NVidia fell 12% since its all-time high on June 20.
The recent pressure on Bitcoin has given the Bears a potential $430 million advantage.
It’s been two months since Bitcoin’s halving, which may explain why 57% of bullish bets were placed above $70,000. However, the market has actually been weak over the past two weeks, making these call (buy) options essentially worthless. If Bitcoin remains near $61,500 at 8 AM UTC on June 28, your rights to buy BTC at $62,000 and $64,000 will not expire. Similarly, put options at $58,000 and $60,000 are rendered as null.
Bitcoin bulls, with weak macroeconomic data, favor more aggressive interest rate cuts and monetary stimulus campaigns from the U.S. Federal Reserve (Fed) and the Treasury. New U.S. single-family home sales in May were the lowest in six months, down 11.3% from a year ago. What’s even more concerning is that at the current sales pace, it will take 9.3 months to clear the supply of new homes, compared to 8.1 months in April.
A June 24 Charles Schwab report noted that current financial market dynamics mirror 2021 and potentially suggest a bear market is on the horizon. The alarm is ringing because the gap between the S&P 500 and equal-weighted indexes is widening, led by AI stocks. Analysts concluded there was no imminent danger to the bull market, but advised that “more members will need to join the party if the music is to last.”
Currently, Deribit is the absolute market leader in June BTC options, with a total outstanding amount of $6.65 billion. Vice-captain Chicago Mercantile Exchange (CME) attracted $1.15 billion in open interest, followed by OKX with $735 million and Binance with $520 million. In total, total call and put BTC options as of June 28 amount to $9.25 billion, which is a significant amount, but at the same time inflated by overly bullish call options.
A put-call ratio of 0.51 represents an imbalance between $4.4 billion of call open interest and $2.25 billion of put options. Nonetheless, if the Bitcoin price remains below $65,000 at 8:00 AM UTC on June 28, only $440 million worth of these call options will participate in expiration.
Related: Spot Bitcoin ETF reverses outflow for 7 consecutive days
Bitcoin Bulls Need $64,000 to Avoid Losses
Below are the four most likely scenarios based on current price trends. Availability of the June 28 call and put option contracts depends on the settlement price.
- $57,000~$60,000: There are 660 call options and 14,850 put options. The net result favors put options by $820 million.
- $60,000~$62,000: There are 3,910 call options and 11,140 put options. The net result is a preference for put (sold) options worth $430 million.
- $62,000~$64,000: There are 5,220 call options and 8,690 put options. The net result favors the put option by $215 million.
- $64,000~$66,000: There are 6,880 call options and 6,940 put options. The result is roughly balanced between call and put options.
This rough calculation assumes that call options are primarily used for bullish bets and put options are used for neutral to bearish positions. However, these simplifications do not account for more complex investment strategies.
Simply put, Bitcoin bulls desperately need to hold on to $60,000 support before the June 28 expiration to avoid a potential $820 million scenario, which favors Deribit’s put options.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.