A total of $9.25 billion in Bitcoin (BTC) options is set to expire on the morning of June 28. June’s monthly expiry is especially important given that it marks the end of the first half of 2024 and historically is the second largest expiry in every market, including the traditional finance industry. Investors are especially concerned after the $3 trillion tech giant NVidia traded down 12% since its all-time high on June 20.
Recent pressure on Bitcoin gave bears a potential $430 million advantage
It has been two months since the Bitcoin halving, which likely explains why 57% of the bullish bets have been placed at $70,000 or higher. But, in reality, the market displayed weakness in the past two weeks, making those call (buy) options essentially worthless. If Bitcoin remains near $61,500 on June 28 at 8:00 am UTC, the rights to buy BTC at $62,000 and $64,000 will not take part in the expiry. Similarly, put (sell) options at $58,000 and $60,000 are rendered null.
Bitcoin bulls have weak macroeconomic data on their side, which favors a more aggressive rate cut and monetary stimulus campaigns from the United States Federal Reserve and Department of Treasury. Sales of new U.S. single-family homes dropped to a six-month low in May, down 11.3% from the prior year. More concerningly, at the current sales pace, it would take 9.3 months to clear the new houses supply, up from 8.1 months in April.
A June 24 Charles Schwab report noted that the current finance market dynamics mirror 2021, potentially signaling a bear market on the way. Reasons for the alarm include a growing divergence between the S&P 500 and equally weighted indexes, with artificial intelligence stocks leading the way. The analysts conclude that there’s no imminent risk for the bull market, but advise that “more members will need to start joining the party for the music to stay on.”
Currently, Deribit is the absolute market leader for the June BTC options, totaling a $6.65 billion open interest. The Chicago Mercantile Exchange (CME), the vice-leader, entices a $1.15 billion open interest, followed by OKX with $735 million and Binance at $520 million. On aggregate, the total call and put BTC options for June 28 stand at $9.25 billion, which is considerable but at the same time inflated by excessively bullish call options.
The 0.51 put-to-call ratio indicates an imbalance between the $4.4 billion call open interest and the $2.25 billion put options. Nevertheless, if Bitcoin's price stays below $65,000 at 8:00 am UTC on June 28, only $440 million worth of these call options will take part in the expiry.
Related: Spot Bitcoin ETFs reverse 7-day outflow streak
Bitcoin bulls need $64,000 to avoid losses
Below are the four most likely scenarios based on the current price trends. The availability of options contracts for calls and puts on June 28 varies depending on the settlement price.
- Between $57,000 and $60,000: There are 660 calls versus 14,850 puts. The net result favors the put (sell) options by $820 million.
- Between $60,000 and $62,000: There are 3,910 calls versus 11,140 puts. The net result favors the put (sell) options by $430 million.
- Between $62,000 and $64,000: There are 5,220 calls versus 8,690 puts. The net result favors the put (sell) options by $215 million.
- Between $64,000 and $66,000: There are 6,880 calls versus 6,940 puts. The outcome is approximately balanced between call and put options.
This rough calculation assumes that call options are used primarily for bullish bets and put options for neutral-to-bearish positions. However, this simplification does not account for more intricate investment strategies.
In short, Bitcoin bulls desperately need to sustain the $60,000 support ahead of the June 28 expiry to avoid a potential $820 million scenario favoring the put options at Deribit.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.