Bitcoin bulls gain an advantage, targeting $110,000

Bitcoin traders (BTC) are closely following the expiration date of the monthly options contract worth 20 billion USD set for Friday.

Although Bitcoin has decreased by 1.5% in the past 30 days, traders using options contracts to hedge against downside risks have prepared for a sharper decline.

The recent recovery may provide the bulls with an important opportunity to solidify the support level of $105,000, a crucial area in the effort to reach a new ATH in the coming weeks.

The Bitcoin options contract open for June 27, USD | Source: Laevitas.chCurrently, the open call options contract (call) is 11.2 billion USD, compared to 8.8 billion USD for the put options (put). Notably, 7.1 billion USD of these put options have a strike price of $101,000 or lower. Therefore, the advantage has shifted in favor of bullish bets.

The bear market depends on increasing instability

Some market observers believe that the strength of Bitcoin is due to the more dovish tone from the Chairman of the Federal Reserve (Fed), Jerome Powell.

In his testimony on Tuesday before the House Financial Services Committee, Powell stated that "there are many scenarios" regarding interest rates, including "earlier cuts" if inflation remains low.

According to Yahoo Finance, other Fed officials, including Governor Michelle Bowman and Chris Waller, have indicated that they expect interest rates to be cut as early as the Fed's policy meeting in July, citing recent data showing that inflationary pressures are being controlled. Meanwhile, the S&P 500 has risen to its highest level in more than four months.

S&P 500 futures contract (left) compared to Bitcoin/USD (right) | Source: TradingViewBitcoin bulls see the stock market's upward momentum as an early signal that investors currently holding short-term government bonds may soon shift to riskier assets in search of higher returns. This argument is bolstered as analysts forecast a modest 5% revenue growth for the S&P 500 in 2025.

Therefore, even if central banks refrain from expanding the money supply in the near future, the decline in yields on fixed-income instruments may still drive the upward momentum of Bitcoin.

As the expiration date of the options contracts approaches, the worst-case scenario will require increased uncertainty, stemming from a decrease in hashrate or geopolitical instability, such as rising tensions in the Middle East.

Bitcoin bulls will have an advantage if the price stays above $100,000

Below are five potential scenarios based on the current price trend. These outcomes estimate theoretical profits based on the imbalance of open contracts but do not include complex strategies.

To minimize losses, the bears must push Bitcoin below $101,500 on Friday, a decrease of 5% from the current $107,300. On the other hand, the bulls can strengthen their position by keeping the price above $106,000, potentially setting the stage for a rally in July, especially if the inflow continues into spot Bitcoin funds.

Vincent