Bitcoin (BTC) bulls are yet licking their wounds from the bloody Dec. iv correction, which saw the price plummet from $57,000 all the way to $42,000. This 26.5% downside motion caused $850 meg in long BTC futures contracts to exist liquidated, but more importantly, it shifted the "Fright and Greed index" to its lowest level since July 21.

Bitcoin/USD price at FTX. Source: TradingView

Information technology is somehow strange to compare both events, every bit the July 21 sub-$30,000 low would accept erased the unabridged gains in 2022. Meanwhile, the $42,000 low from Dec. 4 is however a 44% gain yr-to-date. Compare this against the S&P 500, which is up 21% in 2022, and the WTI oil price, which has accrued a 41% gain.

Bulls might exist focused on the Bitcoin reserves held at exchanges, which continues to descend and currently sits at the lowest level in three years. According to data from CryptoQuant, there are now less than two.27 million BTC deposited at exchanges and having fewer coins available for trading signals that investors are unwilling to sell in the short term. This is a dynamic that many investors consider to exist bullish.

Fifty-fifty with the apparent rest between call (buy) and put (sell) options on Friday's $1.ane billion death, bears are ameliorate positioned after Bitcoin stabilized slightly above $50,000.

Bitcoin options aggregate open interest for Oct. 10. Source: CoinGlass

A broader view using the call-to-put ratio shows a minor 7% advantage to Bitcoin bulls because the $555 million call (purchase) instruments have a larger open involvement versus the $520 million put (sell) options. However, the 1.07 indicator is deceptive because the eleven.v% price drop over the by week caused most bullish bets to become worthless.

For instance, if Bitcoin's price remains below $52,000 at viii:00 am UTC on December. 10, only $50 million worth of those call (buy) options will be available. That effect happens because there is no value in the correct to buy Bitcoin at $55,000 if it is trading beneath such price.

The numbers advise that bulls are set for a major loss

Below are the three virtually probable scenarios based on the current price activeness. The number of option contracts available on Dec. 10 for bulls (call) and bear (put) instruments vary depending on the expiry BTC price. The imbalance favoring each side constitutes the theoretical profit:

  • Betwixt $47,000 and $fifty,000: 400 calls vs. 6,600 puts. The internet result is $300 million favoring the put (behave) instruments.
  • Betwixt $50,000 and $54,000: 1,700 calls vs. iv,700 puts. The net result is $160 million favoring the put (bear) instruments.
  • Above $54,000: two,400 calls vs. 2,900 puts. The net issue favors the put (bear) options by $30 million.

This crude approximate considers the call options being used in bullish bets and the put options that are exclusively in neutral-to-surly trades. Even so, this oversimplification disregards more than complex investment strategies.

For case, a trader could have sold a call selection, effectively gaining a negative exposure to Bitcoin above a specific price. Simply, unfortunately, there's no easy mode to estimate this effect.

Bears will do their all-time to hold BTC beneath $50,000

Bitcoin bears need a gentle push button to sub-$50,000 to score a $300 million profit. On the other hand, bulls would demand a seven.2% price recovery from the electric current $50,500 to reduce their loss past half.

Considering the $2 billion liquidation of leverage long positions on Dec. four, bulls are likely trying to stay afloat and will be unwilling to add together more risk right now. It would be unnecessarily ineffective for bullish investors to waste matter their efforts trying to salvage this short-term loss.

So, in this example, bears wait set to maintain the upper paw in this weekly options expiry.

The views and opinions expressed hither are solely those of the author and exercise not necessarily reflect the views of Cointelegraph. Every investment and trading motion involves risk. Y'all should bear your own enquiry when making a decision.