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Bitcoin has been strongly defending its $47,000. As we head into Friday’s expiry, here’s what traders need to do.
After Thursday’s correction, the broader market has recovered on a solid footing today. As of press time, the overall crypto market is up 6% moving back above $2 trillion.
The world’s largest cryptocurrency Bitcoin (BTC) also surged past $47,000 earlier today. However, at press time, Bitcoin is trading at $46,999 and has a market cap of $880 billion.
Bitcoin is having strong support at $44,000 as we are heading into Friday’s expiry. Thus, there’s little possibility that a $50,000 call option could be of any use. Besides, there are a total of 3,700 ultra-bullish call options contracts for above $50,000 levels.
The adjusted open interest for neutral to bullish call options stands at $190 million. An expiry under $48,000 levels will reduce the number to $138 million. However, the bears strike hard ahead in the day ad push BTC under $46,000 levels only $67 million of the total call options will be executable during Friday’s expiry.
The Bitcoin investor community is offering some unpleasant surprises to bears since 73% of the total protective put options are under $44,000 levels. However, if the Bitcoin expiry takes place above this level, the open interest for Bitcoin options will drop to $65 million.
By pushing the BTC price under $45,000, bears will virtually balance between call options and protective put options. An expiry above $46,000 will increase the chances of BTC bulls to $105 million. This provides a good enough reason for increased buying pressure ahead of Friday’s expiry.
Bitcoin Correlating With S&P 500 and Gold
Bitcoin has been showing a close correlation to the S&P 500 over the last month. However, this week’s correction on Wall Street has seen the S&P 500 coming under pressure. As on-chain data provider Santiment explains:
Over the past month, Bitcoin and the #SP500 have been correlating quite strongly, and that includes the mild decline over the past couple of days. Meanwhile, the inverse correlation between $BTC and #gold‘s price has calmed down significantly.
On the other hand, Bitcoin exchange flows have been dominating throughout the month of August. Another on-chain data provider Glassnode notes:
“Bitcoin exchange flows have returned to a dominance of outflows through August as investors withdraw $BTC. The market has transitioned through a number of phases of exchange flow dominance over the last year, with outflow dominance last seen in late 2020.”
Bitcoin has seen a strong rebound over the last few weeks. It has gained nearly 60% over the last month. If Bitcoin (BTC) continues with the current trend, we can see the levels of $50,000 very soon.