So far, the price of Bitcoin is down 65% for 2022, but it is necessary to compare the price action against the largest technology companies in the world. For example, Meta Platforms (META) is down 70% year-to-date, Snap Inc. (SNAP) at 80%. Moreover, Cloudflare (NET) lost 71% in 2022, followed by Roblox (RBLX), down 70%.

Inflationary pressures and fear of a global recession have pushed investors away from riskier assets. This protective move caused the five-year US Treasury yield to reach 4.33% earlier in November, its highest level in 15 years. Investors are demanding a higher premium for holding government debt, indicating a lack of confidence in the Fed’s ability to curb inflation.

Contagion risks from the bankruptcies of FTX and Alameda Research are the most pressing issues. The trading group has managed several cryptocurrency venture funds and was the second largest trading exchange for bitcoin derivatives.

The bulls were overly optimistic and will suffer the consequences
Open interest for the November 11 options expiration is $710 million, but the actual figure will be lower because the bulls were poorly prepared for prices below $19,000. These traders were very confident in their overconfidence after Bitcoin held more than $20,000 for almost two weeks.

Bitcoin options pool open interest for november 11th. Source: CoinGlass
The call-to-call ratio of 0.83 reflects the imbalance between the open interest of call (buy) of $320 million and put options (put) of $390 million. Currently, Bitcoin is standing near $17,500, which means that most of the bullish bets are likely to become worthless.

If the Bitcoin price remains below $18,000 at 8:00 AM UTC on November 11, only $45 million worth of call (buy) options will be available. This difference occurs because the right to buy Bitcoin at $18,000 or $19,000 is useless if BTC trades below that level at expiration.

The bears are aiming for less than $17,000 to secure a profit of $200 million
Here are the three most likely scenarios based on the current price action. The number of options contracts available on November 11 for the buy (bull) and put (bear) instruments varies, depending on the expiration price. The imbalance in favor of each side constitutes the theoretical gain:

Between $16,000 and $18,000: 1,300 calls for 12,900 points. Bears dominate, making $200 million in profits.
Between $18,000 and $19,000: 2,500 calls for 10,200 points. The net result favors put (bear) tools by $140 million.
Between $19,000 and $20,000: 3,600 calls for 5,900 points. Net result favor puts (Bear) by $40 million.
This rough estimate takes into account buy options used in bullish bets and put options exclusively in neutral to bearish trades. However, this oversimplification ignores more complex investment strategies.

For example, a trader could have sold a call option, effectively gaining negative exposure to bitcoin above a certain price, but unfortunately, there is no easy way to estimate this effect.

Related: Grayscale Bitcoin Trust Scores 41% Discount Amid FTX Crash

It is likely that the bulls will have less margin to support the price
Bitcoin bulls must push the price above $19,000 on November 11 to avoid a potential loss of $140 million. On the other hand, the best-case scenario for the bulls requires a slight push below $17,000 to maximize gains.

Bitcoin bulls liquidated $352 million worth of leveraged long positions in two days, so they may have less margin needed to support the price. In other words, the bears have a head start on pinning BTC below $17,000 before the weekly options expire.

Source: CoinTelegraph