The upcoming $1.9 billion Bitcoin (BTC) month-to-month choices expiry on Aug. 25 is essential to defining whether or not the $26,000 help level will maintain. One might pin the current cryptocurrency market sell-off to the U.S. Securities Alternate Commission choice to delay the spot Bitcoin exchange-traded funds (ETF), however there’s additionally the macroeconomic perspective.

If the U.S. Federal Reserve’s efforts to curb inflation work, it is possible that the pattern of a stronger U.S. dollar will persist. This was evident because the Greenback Power Index (DXY), a measure of the dollar towards different currencies, reached its highest level in 76 days by August 22.

To forestall a possible lack of $380 million because of the month-to-month BTC choices expiry, Bitcoin bulls should guarantee Bitcoin’s worth trades above $27,000 by August 25.

Bitcoin bears will profit from the specter of harsh regulation

Cryptocurrency bulls have encountered regulatory challenges currently. That is evident as the highest two cryptocurrency exchanges, Binance and Coinbase, are presently entangled in lawsuits with the SEC. Moreover, the preliminary victory celebrated by Ripple towards the SEC is now underneath attraction by the regulatory physique.

Including to those developments, Bitstamp trade lately revealed its choice to halt staking companies for U.S.-based purchasers. A pivotal concern throughout the ongoing U.S. regulatory panorama revolves across the classification of ETH as both a commodity or a safety.

Moreover, Binance trade has communicated the suspension of its crypto debit card choices throughout Latin America and the Center East. This choice follows allegations of Binance additionally suspending Euro withdrawals and deposits by way of SEPA on August 20. The trade clarified that there is no such thing as a particular timeline for reinstating the service.

Information exhibits bulls have been excessively optimistic on Bitcoin worth

The open curiosity for the choices expiry on August 25 stands at $1.9 billion. Nonetheless, it is projected that the ultimate quantity can be much less on account of sure merchants foreseeing worth ranges reaching $29,000 and even higher. The sudden 12% correction in Bitcoin’s worth from August 14 to August 19 actually took bullish buyers off guard, as evident from the Deribit Bitcoin choices curiosity chart.

Deribit Bitcoin choices mixture open curiosity for July 28. Supply: Deribit

The 0.56 put-to-call ratio displays the imbalance between the $1.2 billion in name (purchase) open curiosity and the $685 million in put (sell) choices. Nonetheless, if Bitcoin’s worth stays close to $26,500 at 8:00 am UTC on Aug. 25, solely $35 million price of those name (purchase) choices can be accessible. This distinction occurs as a result of the proper to purchase Bitcoin at $27,000 or $28,000 is ineffective if BTC trades beneath that level on expiry.

Bitcoin bears purpose for sub-$26,000 to maximise their features

Beneath are the 4 most probably situations primarily based on the present worth motion. The variety of choices contracts accessible on Aug. 25 for name (purchase) and put (sell) devices varies relying on the expiry worth. The imbalance favoring either side constitutes the theoretical revenue.

This crude estimate disregards extra complicated funding methods. For example, a dealer might have offered a name possibility, successfully gaining adverse publicity to Bitcoin above a particular worth. Sadly, there’s no simple strategy to estimate this impact.

• Between $25,000 and $26,000: 100 calls vs. 15,100 places. The web consequence favors the put devices by $380 million.
• Between $26,000 and $27,000: 1,400 calls vs. 11,000 places. The web consequence favors the put devices by $250 million.
• Between $27,000 and $28,000: 4,000 calls vs. 8,400 places. The web consequence favors the put devices by $110 million.
• Between $28,000 and $29,000: 6,000 calls vs. 5,300 places. The web result’s balanced between name and put choices.

Take observe that for the bulls to level the taking part in subject earlier than the month-to-month expiry, they have to obtain a 6% worth enhance from $26,400. In distinction, the bears solely require a modest 2% correction beneath $26,000 to safe a $380 million benefit on August 25.

Given Bitcoin’s repeated drops beneath the $26,000 help level from August 21 to August 23, it would not be stunning if this level was examined once more earlier than the choices expiry. Moreover, contemplating the present cryptocurrency regulatory panorama, there’s minimal incentive for Bitcoin bulls to reverse the prevailing bearish momentum after the $1.9 billion month-to-month choices expiry.

This text is for normal data functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the creator’s alone and don’t essentially replicate or signify the views and opinions of Cointelegraph.