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Bitcoin derivatives suggest a climb to $48K, but only after a retest of a lower support level

Even if a retest of the $45,000 level is required first, analysts are mainly bullish on BTC’s short-term price behaviour.

Bitcoin (BTC) has gained 11% in the last week after finally breaking through the $46,000 resistance after 82 days. Many crypto experts believe Terraform Labs CEO Do Kwon played a key role in the price change, but this has yet to be proven.

Following a $139 million purchase on March 29, a Bitcoin address suspected to belong to Terra has acquired nearly $1.5 billion in BTC. TerraUSD (UST) is an algorithmic stablecoin that aims to buy up to $10 billion in Bitcoin to support its “dollar” reserve.

There have been mixed feelings on the macroeconomic front. The Consumer Price Index in the United Kingdom climbed by 6.2 percent year on year, exceeding the expectation of 5.9 percent. In the United States, however, the opposite occurred, with durable goods orders falling by 2.2 percent.

The current level of inflation in the United States is the greatest in 40 years, and interest rates approaching zero provide a favourable climate for scarce assets such as Bitcoin.

When compared to hard assets, Bitcoin is undervalued


Bitcoin’s recent surge should not come as a surprise, given that the S&P 500 is only 4% behind its all-time high of 4,819 points. Bears were taken off guard as Bitcoin price steadied above $47,000 on March 30. Bulls came in stronger after call (buy) option instruments dominated the April 1 options expiry, and bears were caught off guard after call (buy) option instruments dominated the April 1 options expiry.

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Because the $605 million call (buy) instruments have a bigger open interest than the $435 million put (sell) options, a broader picture utilising the call-to-put ratio gives a 39 percent edge to Bitcoin bulls. The 1.39 call-to-put indicator, on the other hand, is misleading because most bearish bets will lose value.

Only $80 million worth of put (sell) options will be available if Bitcoin’s price remains over $47,000 at 8:00 a.m. UTC on April 1. Because the right to sell Bitcoin at $45,000 has no value if it is trading over that level, this consequence occurs.

Bitcoin bulls are aiming for a profit of $385 million


Based on the present price activity, the three most likely possibilities are listed below. The quantity of bull (call) and bear (put) options contracts available on April 1 varies based on the expiry price. The theoretical profit is determined by the imbalance favouring either side:

  • 3,000 calls vs. 2,650 puts between $44,000 and $46,000. The net result favours the call (bull) instruments by $120 million.
  • 7,900 calls vs. 1,700 puts between $46,000 and $48,000. The overall result is $290 million in favour of bulls.
  • 9,350 calls vs. 1,300 puts between $48,000 and $49,000. The net outcome is $385 million in favour of the call (bull) instruments.

This rough estimate takes into account call options in bullish wagers and put options in neutral-to-bearish transactions. Despite this, more complex investment methods are ignored by this simplicity.

A trader, for example, could have sold a call option to earn a negative exposure to Bitcoin above a certain price. Regrettably, there is no simple way to calculate this effect.

On April 1, bitcoin bulls will need a slight boost above $48,000 to make a $385 million profit. The best-case scenario, on the other hand, calls for a 3% price drop from the current $47,200 to bring their loss down to $120 million.

According to Coinglass statistics, bitcoin bears liquidated $580 million in short bets between March 26 and March 30. As a result, bulls should continue to show strength by keeping Bitcoin above $47,000 as the options expiration date approaches on April 1.


Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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