Every fourth dimension a new Bitcoin (BTC) all-time loftier is formed, excessive expectations follow. This time was no different as its price briefly touched $69,000 in the early on hours of Nov. 9.

Words are only words, so there's no loss from being excessively bullish or bearish, but in options markets there's a price for placing those bets. For example, on Nov. 10, a right to buy Bitcoin (call selection) at $100,000 on December. 31 is trading at BTC 0.022, or $1,460. For this privilege, the investor pays an upfront fee, which is also known equally the premium.

Analysts and pundits apace issue their $100,000 targets later on Bitcoin posts its highest monthly close always. Nevertheless, history has proven that brusk-term price estimates seldom work, and it doesn't affair if yous're an bearding Twitter figure or a well-versed multi-million dollar crypto fund manager.

Bitcoin cost estimates are frequently far off

Despite being a widely successful venture capital investor, Tim Draper's $250,000 price guess for 2022 was off past 88%. Even renowned banking concern analysts can go information technology very wrong, as did a Citibank FX Wire "Market place Commentary" from Nov. 2022 where they cited a potential $318,000 loftier in 2022. Still, with fifty days till year-end, maybe some of those prophecies volition turn out true, but the majority remains no improve than random numbers.

Bears are mayhap eyeing regulatory hurdles, for example, Singapore became the latest region to ban crypto derivatives exchanges services. Huobi Global announced on Tuesday that it would shut downwards accounts of all Singapore-based users by the stop of March 2022. In September, Thailand's Securities and Commutation Commission also recommended revoking Huobi'southward local operating license.

An initial assay based on the open up interest of call (buy) options and put (sell) instruments presents a counterbalanced situation for Nov. 12's $1.3 billion options expiry.

Bitcoin options amass open interest for Nov. 12. Source: Bybt

At first sight, the $630 million phone call (purchase) options boss the weekly expiry past a mere 12% compared to the $565 1000000 puts (sell) instruments.

However, the 1.12 call-to-put ratio is deceptive considering the recent rally will probably wipe out most surly bets. For example, if Bitcoin'due south price remains to a higher place $66,000 at viii:00 am UTC on Nov. 12, almost every put (sell) instrument becomes worthless. There is no value in a right to sell Bitcoin at $58,000 or $62,000 if it's trading above that price.

Bulls might aim for a $410 million profit above $70,000

Below are the iv nigh likely scenarios for the November. 12 expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the agile quantity of phone call (buy) and put (sell) contracts varies:

  • Betwixt $64,000 and $66,000: ii,440 calls vs. 310 puts. The cyberspace result is $135 million favoring the telephone call (bull) instruments.
  • Between $66,000 and $68,000: three,430 calls vs. fifty puts. The cyberspace event is $225 million favoring the telephone call (bull) instruments.
  • Between $68,000 and $70,000: 44,070 calls vs. 10 puts. The net result is $305 1000000 favoring the phone call (bull) instruments.
  • Higher up $70,000: 5,820 calls vs. 0 puts. The cyberspace result is complete dominance, with bulls profiting $410 one thousand thousand.

This crude approximate considers telephone call options being exclusively used in bullish bets while put options in neutral-to-surly trades. This oversimplification disregards more than complex investment strategies.

For example, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin in a higher place a specific price. Unfortunately, at that place's no easy way to estimate this result.

The bears' all-time hopes turned out to exist ineffective

Afterward a nineteen% rally in thirty days, bulls dominate Nov. 12'due south weekly expiry. One factor that may have been partially responsible for that move was the absence of an agin toll affect after the $1 trillion U.S. infrastructure pecker passed the United states of america House of Representatives. The pecker mandates all digital asset transactions worth more $x,000 to exist reported to the IRS.

Traders must consider that even surly news has piddling to no bear upon on the cost during balderdash runs. Moreover, the effort bears need to pressure level the price is increased and usually ineffective.

Bulls might have advantage of the current situation by pushing BTC above $70,000, which would result in an additional $105 million estimated turn a profit which would push button their total to $410 million.

The views and opinions expressed here are solely those of the author and do non necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your ain enquiry when making a decision.