$8.1 billion in Bitcoin options expire this month. Will bulls or bears have the upper hand?

Author: Marcel Pechman, CoinTelegraph; Compiled by Wuzhu, Golden Finance

BTC is about to usher in the second largest monthly options expiration since 2024, with a total exposure of $8.1 billion. The question is: is this enough to drive a strong price increase to $70,000, or are the bearish triggers too strong to ignore?

The current macroeconomic environment favors risk assets, including Bitcoin, and the September 27 options expiration will be a key event. If Bitcoin stays above $63,000, neutral to bullish option holders will be well positioned. However, bears have enough incentive to curb this advantage by pushing Bitcoin's price below $60,000.It is therefore critical to analyze the positioning of the options market and the potential net impact of each monthly expiration.

On September 24, Chinese stocks surged after the People's Bank of China (PBOC) announced plans to reduce borrowing costs and inject liquidity into the economy, including a plan to reduce mortgage repayments. In addition, the PBOC pledged $113.8 billion to support the stock market, including share purchases and buyback measures. "There is still room for further easing in the coming months," commented Lynn Song, chief economist for Greater China at ING, as reported by Yahoo Finance.

By stimulating the economy and lowering interest rates, central banks are weakening the appeal of fixed-income investments while fueling inflationary pressures. In such an environment, scarce assets such as Bitcoin tend to outperform,especially when the S&P 500 is less than 1% from its recent all-time high, and home prices in the 20 largest U.S. metropolitan areas have risen 5.9% over the past 12 months, according to the Case-Shiller Index.

Given these favorable macroeconomic conditions, Bitcoin bulls have reason to believe that the $63,000 level will hold until the September 27 options expiration, and may even push towards $65,000. However, to assess the likelihood of such bullish momentum, it is necessary to examine the positions of Bitcoin options traders before expiration.

Total open interest of Bitcoin options on September 27, USD. Source: Laevitas.ch

From a broader perspective, open interest in Bitcoin call (buy) options, valued at $4.9 billion, is 53% higher than the open interest in put (sell) options, valued at $3.2 billion. While this is not unusual – crypto traders generally tend to be bullish – the excessive optimism reflected in betting on Bitcoin prices of $90,000 and above appears overambitious, especially with less than three days until these options expire.

Indeed, 55% of call options have a strike price of $70,000 or more, giving $2.22 billion in notional value a realistic chance of participating in the September monthly expiration. Similarly, 69% of put options have a strike price of $56,000 or less, making it likely that they will expire worthless, reducing the outstanding notional value to around $1 billion.

Bitcoin Call (Buy) Options Well Positioned in Favor of Bulls

Below are the four most likely scenarios based on current price trends. The availability of call and put options for the September 27 expiration depends on the settlement price of Bitcoin at that time.

This rough estimate assumes that call options are primarily used for bullish positions, while put options are used for neutral to bearish strategies. However, it is important to note that this is a simplification and does not take into account more complex investment strategies.

• Between $57,000 and $58,000:The net result favors put (sell) options by $250 million.

• Between $58,000 and $60,000:The net outcome is expected to be roughly balanced between calls and puts.

• Between $60,000 and $62,000:The net outcome favors calls (buys) by $550 million.

• Between $62,000 and $64,000:The net outcome favors calls (buys) by $1 billion.

Shorts are under intense pressure to push Bitcoin prices below $60,000 before the September monthly expiration to avoid a scenario where calls would make a profit of $550 million. However, given favorable macroeconomic conditions, including rate cuts from the Federal Reserve and stimulus measures from the Chinese central bank, the odds appear to be stacked in favor of Bitcoin bulls.