Bitcoin’s price has seen a significant surge over the past few days, gaining 6.3% just two days after reaching its lowest level in over three weeks. The cryptocurrency’s rise can be partially attributed to the latest data from the U.S. Consumer Price Index, which showed a 6.4% increase in year-over-year inflation in January. The inflation data has caused the U.S. Federal Reserve to monitor the economy closely, with interest rate hikes expected to follow. This is causing a bullish environment for scarce assets such as cryptocurrencies, stock markets, and commodities.
However, with $675 million in Bitcoin options set to expire on February 17, bears may try to take control by pushing the cryptocurrency’s price below $22,000. Even though the price gain of Bitcoin has practically extinguished bears’ expectations for a sub-$21,500 options expiry, their bets may still pay off if the price falls.
Bitcoin investors’ primary concern is the possibility of further impact from regulators following the recent crackdown on Binance USD stablecoin issuing and the U.S. Securities and Exchange Commission’s order to Kraken to halt its staking rewards program.
The $675 million open interest for the options expiry is lower than the actual figure, as bears were expecting sub-$22,000 price levels. The 1.12 call-to-put ratio reflects the imbalance between the $355 million call (buy) open interest and the $320 million put (sell) options.
Bulls aim for $23,000 to secure a $155 million profit. Based on current price action, four scenarios are possible, with varying numbers of options contracts available for call and put instruments, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit.
Between $21,000 and $22,000: 700 calls vs. 5,500 puts. The net result favors the put (bear) instruments by $100 million.Between $22,000 and $22,500: 1,800 calls vs. 1,500 puts. The net result is balanced between bears and bulls.Between $22,500 and $23,000: 3,800 calls vs. 1,100 puts. The net result favors the call (bull) instruments by $60 million.Between $23,000 and $24,000: 6,900 calls vs. 200 puts. The net result favors the call (bull) instruments by $155 million.
However, this estimate does not account for more complex investment strategies, which could have a significant impact on the cryptocurrency’s price.
Bitcoin bulls need to push the price above $23,000 on February 17 to secure a potential $155 million profit. On the other hand, bears may benefit from the impact of regulation and aim to push the cryptocurrency’s price below $22,000 to maximize their gains.