Bitcoin derivatives data shows bulls positioning for further BTC price upside

Bitcoin (BTC) price maintained the $30,000 support as lower-than-expected US Consumer Price Index (CPI) data was released on April 12. The official inflation rate for March rose 5% year-on-year, which was slightly less than 5.1%. consensus. That was the lowest reading since May 2021, but remains significantly higher than the US Federal Reserve’s 2% target.

The data suggests that inflation is no longer driving Bitcoin’s rally, and investors’ focus has shifted from the impact of inflationary pressures to potential recession risks after the banking crisis exposed how fragile the financial system was after the Federal Reserve’s 12-month hike. in interest from 0.10% to 4.85%.

Aside from the Silicon Valley Bank bankruptcy and the government-backed sale of Credit Suisse to UBS, several warning signs of a macroeconomic slowdown have emerged.

The latest data from the ISM Purchasing Managers Index fell to the lowest level since May 2020, indicating an economic slowdown. According to Federal Reserve documents released on April 12, the aftermath of the US banking crisis is likely to push the economy into a “mild recession” later this year. Because of the crisis, some have speculated that the Fed will wait to raise interest rates, but officials confirmed that more efforts are needed to keep inflation under control.

According to a Moody’s Analytics report, commercial real estate prices fell 1.6% in February, the most since the 2008 financial crisis. Furthermore, the national office vacancy rate reached 16.5%, indicating the severity of the financial difficulties currently facing businesses .

Whatever the reason for Bitcoin’s 50% rally between March 11 and April 11, it shows resistance to FUD — fear, uncertainty and doubt — including the Securities and Exchange Commission’s Wells notice against Coinbase on March 22 and the Commodity Futures Trading Commission’s filing case against Binance and its CEO, Changpeng Zhao, on March 27. By holding the $30,000 support, Bitcoin demonstrates that the positive momentum can continue regardless of whether inflation remains above 5%.

Bulls are better positioned for the weekly BTC options expiring

Not everyone is cheering the rally, especially traders who have placed bearish bets using Bitcoin options. The April 14 open interest for BTC options expiration is $950 million, with $490 million in calls and $460 million in puts. Bears have been caught off guard, with less than 7% of their bets exceeding $29,000.

Below are the four most likely scenarios based on current price action. The number of call (call) and put option contracts available on April 14 varies depending on the expiration price. The imbalance favoring each side constitutes the theoretical profit:

• Between $28,000 and $29,000: 2,600 calls vs. 1,800 putts. The net result is balanced between call and put options.
• Between $29,000 and $30,000: 6700 calls vs. 500 putts. The net result favors the call (buy) instruments by $110 million.
• Between $30,000 and $30,500: 8,500 calls vs. 200 putts. The Bulls increase their advantage to $250 million.
• Between $30,500 and $31,500: 11,300 calls vs. 100 putts. The Bulls’ advantage increases to $350 million.

This rough estimate only considers call options in bullish plays and put options in neutral-to-bearish trades. Nevertheless, this simplification precludes more complex investment strategies. A trader, for example, could have sold a put option, effectively gaining positive exposure to Bitcoin above a certain price, but this effect is difficult to estimate.

Related: Bitcoin-friendly PPI data boosts bulls as Ether price struggles for $2K

Bears are unlikely to reverse the situation

Bulls are expected to push Bitcoin above $30,500 on April 14 at 08:00 UTC to earn another $100 million. Bears, on the other hand, need to push Bitcoin’s price below $29,000 to balance the scales. However, bears recently suffered significant losses when $128 million worth of BTC futures short contracts were liquidated between April 9th ​​and April 11th.

Since the most likely scenario favors Bitcoin bulls, their gains will most likely be used to reinforce the $30,000 support. Bears may consider licking their wounds and waiting for further actions from regulators, as the macroeconomic scenario is currently positive for supply-constrained assets.

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