On the weekly $1.2 billion Bitcoin options expiry, the Silicon Valley Bank bailout gave BTC bulls a sizable advantage.
Notwithstanding the fact that $24,750 on March 14 was the highest daily close in nine months, the rejection that came after Bitcoin’s BTC $25,792 climb to $26,500 may have appeared to be a win for the bears. Also, since March 10, when Silicon Valley Bank was shut down by the California Department of Financial Protection and Innovation, Bitcoin has increased by 26.5%. (SVB).
Many variables, including the unprecedented $25 billion funding by the Federal Reserve and the United States Treasury on March 12, which decreased banks’ systemic risks, could be blamed for the recent price surge. Yet, when weekly options expire in March, Bitcoin bulls will be in a good position to make up to $440 million.
How a stablecoin bank run was started by Silicon Valley Bank
Prior to its demise, SVB had assets of more than $200 billion, ranking it among the top 20 financial organizations in the country. Yet, the $3.3 billion deposit from Circle’s Dollar Coin USDC $1.00 stablecoin reserves had the greatest direct impact on the cryptocurrency market. Once the stablecoin traded below parity from March 13 to 15, USDC’s net redemptions reached $3 billion. The New York Department of Financial Services’ March 12 closure of Signature Bank increased the downward pressure on cryptocurrency prices. Nonetheless, Silvergate was more significant to the cryptocurrency sector because it offered services to numerous companies involved in the sector, such as Coinbase, Celsius, and Paxos.
This trend could be the reason why bulls will almost surely win out at the $1.2 billion Bitcoin weekly options expiry on March 17. But a decline in commodity costs, especially for oil, could affect cryptocurrencies.
the cheapest price for crude oil since December 2021
Between March 9 and 15, oil prices dropped 10%, hitting their lowest point in over a year. This decline was attributed to worries that a banking sector confidence crisis could trigger a recession and lower oil consumption.
U.S. oil stockpiles rose by 1.6 million barrels last week, per official data made public on March 16; this contributed to market bearishness. The surge exceeded the 1.2 million barrel build-up that was widely expected.
Bitcoin may find it difficult to maintain the price levels necessary to make $360 million or more on the March 17 options expiry if the fear of contagion extends to other markets.
More bets were placed by bears, but the most will be lost.
Although there is $1.2 billion in open interest for the March 17 options expiry, the real amount will be less because bears have focused their bets on Bitcoin selling below $23,500.
The 0.93 call-to-put ratio reflects the difference in open interest between the $640 million put (sell) options and the $590 million call (buy) options. Yet, since bears were taken off guard when Bitcoin’s price soared past $23,000 on March 13, the anticipated outcome is probably significantly lower.
For instance, there will only be $32 million in put (sell) options available on March 17 if the price of Bitcoin is still around $24,500 at 8:00 a.m. UTC. This distinction is necessary because if BTC moves beyond that price at expiration, the right to sell Bitcoin at $23,000 or $24,000 is void.
Only call options in bullish wagers and put options in neutral to bearish trades are taken into account in this preliminary estimation. Yet, this oversimplification leaves out more intricate investing plans.
There is no simple method to calculate the impact of a trader selling a call option, for instance, essentially accruing negative exposure to Bitcoin over a certain price.
On March 17, Bitcoin bears must drive the price below $24,000 in order to severely cut their losses. Yet, given the $240 million liquidation in leveraged short contracts employing futures between March 12 and 15, bears have less room to exert pressure.
