Bitcoin bears could face $440M loss in Friday’s options expiry

The rejection that followed Bitcoin’s (BTC) rally to $26,500 may appear to be a victory for bears, but $24,750 on March 14 was the highest daily close in nine months. Furthermore, Bitcoin has gained 26.5% since March 10, when the California Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB).

The recent price increase could be attributed to various factors, including the extraordinary $25 billion funding by the Federal Reserve and the United States Treasury on March 12, which reduced banks’ systemic risks. Nonetheless, Bitcoin bulls are well positioned to profit up to $440 million when weekly options expire on March 17.

How Silicon Valley Bank triggered a stablecoin bank run

Before its downfall, SVB’s total assets surpassed $200 billion, placing it among the top 20 financial institutions in the United States. Nonetheless, the most direct impact on the cryptocurrency market was the $3.3 billion deposit from Circle’s USD Coin (USDC) stablecoin reserves. USDC’s net redemptions totaled $3 billion between March 13-15, as the stablecoin traded below parity.

Signature Bank (SI), closed down on March 12 by the New York Department of Financial Services, added to the negative pressure on crypto markets. Silvergate was more important to the crypto industry because it provided services to many crypto-related businesses, including Coinbase, Celsius and Paxos.

This movement may explain why the $1.2 billion Bitcoin weekly options expiry on March 18 will almost certainly benefit bulls. However, a drop in commodity prices, particularly for oil, could have an impact on cryptocurrencies.

Crude oil at its lowest price since December 2021

Oil prices fell 10% between March 9-15, reaching their lowest levels in over a year, amid concerns that a banking-sector confidence crisis could cause a recession and reduce oil demand.

According to government data released on March 16, U.S. crude stockpiles increased by 1.6 million barrels last week, adding to market bearishness. The increase was higher than the consensus forecast of a 1.2 million barrel build-up.

If the fear of contagion spreads to other markets, Bitcoin may struggle to maintain the price levels required to profit $360 million or more on the March 17 options expiry.

Bears placed more bets, but the vast majority will be worthless

Open interest for the March 17 options expiry is $1.2 billion, but the actual figure will be lower because bears have concentrated their bets on Bitcoin trading below…