It’s been 51 days since Bitcoin (BTC) last closed above $24,000, causing even the most bullish trader to wonder if a sustainable recovery is even possible. However, despite the lackluster price action, the bulls have the upper hand in the expiration of the $510 million BTC options on Friday.

Bitcoin/dollar price index for one day. Source: TradingView
Investors have been reducing their exposure to risk as the Federal Reserve raises interest rates and unwinds its record $8.9 trillion balance sheet. As a result, the Bloomberg Commodity Index (BCOM), which measures price changes in crude oil, natural gas, gold, corn and hogs, fell 9% in the same period.

Traders continue to seek protection with US Treasuries and cash positions as San Francisco Fed President Mary Daley said on August 2 that the central bank’s fight against inflation is “far from over.” However, the tighter monetary impact on inflation, employment levels and the global economy is yet to be seen.

Mostly bearish bets below $22,000
Bitcoin’s recovery above $22,000 on July 27 surprised the bears because only 28% of put (sell) options on August 5 were placed above this price level. Meanwhile, Bitcoin bulls may have cheated with a pump of $24,500 on July 30, as 59% of their bets were above $25,000.

Bitcoin options collect open interest on August 5th. Source: CoinGlass
The broader view using the 1.60 call to buy ratio shows more bullish bets because the open interest from long (buying) is $315 million versus put (call) of $195 million. However, with Bitcoin currently above $23,000, it is likely that most bearish bets will become worthless.

For example, if the Bitcoin price remains above $23,000 at 8:00 AM UTC on August 5, only $19 million worth of put (call) options will be available. This difference occurs because there is no use in the right to sell Bitcoin at $22,000 or $20,000 if it is trading above that level at expiration.

The bulls could win $200 million
Below are the four most likely scenarios based on current price action. The number of options contracts available on August 5 for the buy (bull) and put (bear) instruments varies, depending on the expiration price. The imbalance in favor of each side constitutes the theoretical profit:

Between $20,000 and $22,000: 100 calls for 3,700 pips. The net result favors bears by $75 million.
$22,000-24,000: 1,400 calls for 1,600 puts. The net result is balanced between the buying (buying) and selling (selling) instruments.
$24,000-25,000: 3,800 calls for 100 puts. The net result in favor of the bulls is $90 million.
Between $25,000 and $26,000: 0 calls for $7,900. Bulls extend their winnings to $200 million.
This crude estimate takes into account buying options used in bullish bets and selling options exclusively in neutral to bearish trades. However, this oversimplification overlooks more complex investment strategies.

Source: CoinTelegraph