The monthly options expiry for Bitcoin (BTC) on June 30, valued at $4.7 billion, could have a significant impact on whether the $30,000 price level will solidify as long-term support and create opportunities for further bullish momentum.
Bitcoin’s recent surge above $27,000 is widely viewed as a bet on the potential approval of several spot Bitcoin exchange-traded fund (ETF) applications, including those submitted by BlackRock and ARK Invest. This news has also raised expectations that Grayscale will be able to convert its Grayscale Bitcoin Trust into a Bitcoin ETF.
However, there are also potential hurdles for Bitcoin in the form of macroeconomic and regulatory headwinds. The implementation of mandatory Know Your Customer (KYC) procedures by exchanges is a cause for concern among Bitcoin bears. KuCoin recently announced plans to upgrade its KYC system in order to comply with global Anti-Money Laundering regulations.
Another factor affecting Bitcoin’s price is the increasing sell pressure from miners. The network hash rate has reached 400 exahashes per second, and miners have sent a record percentage of their BTC revenue to exchanges, totaling $128 million. This behavior mirrors the patterns seen during the 2021 bull run when miners took profits.
Concerns over the impact of potential interest rate hikes by central banks also weigh on Bitcoin. Federal Reserve Chair Jerome Powell recently warned that most policymakers expect two more rate hikes this year. Investors have priced in an 82% chance of an interest rate increase in late July.
These various factors have contributed to Bitcoin’s recent price movements. Although the price briefly flirted with $31,000 on June 27, strong resistance prevented further gains. This correction to $30,000 suggests that Bitcoin may enter a period of sideways trading as investors assess the potential impact of additional interest rate hikes by the Fed.
The options market for the June 30 expiry is valued at $4.7 billion, but this figure may be lower than expected due to overly optimistic expectations from bulls. These traders anticipated price levels of $32,000 or higher, based on the 25.5% rally from June 15 to June 23. The put-to-call ratio of 0.56 reflects an imbalance between call (buy) and put (sell) options.
If Bitcoin’s price remains around $30,500 at the expiry time, only $630 million worth of call options will be available. This is because the right to buy Bitcoin at higher levels becomes worthless if the price is below those levels on expiry.
Based on the current price action, there are four likely scenarios for the expiry of call and put options on June 30. Each scenario represents a different price range and the imbalance between put and call options:
1. Between $28,000 and $29,000: Bears have the advantage, profiting $250 million.
2. Between $29,000 and $30,000: The result is balanced between put and call options.
3. Between $30,000 and $31,000: Call options have a slight advantage, resulting in a $440 million profit.
4. Between $31,000 and $32,000: Call options dominate, resulting in a $670 million profit.
It is important to note that this estimate does not account for more complex investment strategies or the potential effects of selling put options. The outcome will ultimately depend on whether Bitcoin bears are willing to take on exposure during the SEC’s analysis of potential spot Bitcoin ETF approval.
While it is impossible to predict the timing or size of potential inflows resulting from ETF approval, such an event could pave the way for bulls to secure a $440 million profit by keeping Bitcoin’s price above $30,000 in the short term.
Disclaimer: This article should not be considered legal or investment advice and is for informational purposes only. The opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.