Over the past three months, Bitcoin’s (BTC) daily closing price fluctuated between $35,050 and $47,550, which is a 35.7% range. Although it might seem excessive, this is not unusual, especially considering BTC’s 68% historical annualized volatility. 

The relief rally that came after the April 11 dip below $40,000 followed the U.S. Consumer Price Index (CPI) report that announced 8.5% for March, the highest since 1981. Meanwhile, in the United Kingdom, the CPI jumped to 7%, a 30-year high.

For these reasons, cryptocurrency traders are increasingly concerned about the ability of the U.S. Federal Reserve rate hikes expected throughout 2022 to contain inflationary pressure. If the global economies enter a recession, investors will likely move away from risk-on asset classes like cryptocurrencies.

Moreover, the Bitcoin price correction was costly to leverage traders because the aggregate liquidations reached $428 million at derivatives exchanges.

Bulls placed their bets at $50,000 and above

The open interest for the April 15 options expiry in Bitcoin is $615 million, but the actual figure will be much lower since bulls were overly-optimistic. These traders might have been fooled by the short-lived pump to $48,000 on March 28 because their bets for Friday’s options expiry extend beyond $50,000.

Bitcoin’s recent downturn below $41,000 took bulls by surprise and only 18% of the call (buy) options for April 15 have been placed below that price level.

The 1.21 call-to-put ratio shows the dominance of the $335 million call (buy) open interest against the $280 million put (sell) options. Nevertheless, as Bitcoin stands near $41,000, most bullish bets are likely to become worthless.

If Bitcoin’s price remains below $42,000 at 8:00 am UTC on April 15, only $62 million worth of these call options will be available. This difference happens because a right to buy Bitcoin at $42,000 is worthless if BTC trades below that level on expiry.

Bulls aim for $43,000 to balance the scales

Below are the four most likely scenarios based on the current price action. The number of options contracts available on April 15 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

• Between $39,000 and $41,000: 950 calls vs. 5,400 puts. The net result favors the put (bear) instruments by $180 million.
• Between $41,000 and $42,000: 1,500 calls vs. 3,950 puts. The net result favors bears by $100 million.
• Between $42,000 and $43,000: 1,850 calls vs. 3,300 puts. The net result favors the put (bear) instruments by $60 million.
• Between $43,000 and $45,000: 2,700 calls vs. 2,800 puts. The net result is balanced between call (buy) and put (sell) options.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Related: Mark Yusko explains the real problem with Fed policy — and why Bitcoin matters.

Bears will try to pin BTC below $41,000

Bitcoin bears need to pressure the price below $41,000 on April 15 to secure a $180 million profit. On the other hand, the bulls’ best case scenario requires a push above $43,000 to neutralize any impact.

Bitcoin bulls had $180 million leverage long positions liquidated on April 10 and April 11, so they should have less margin required to drive the price higher. With this said, bears will undoubtedly try to suppress BTC below $41,000 ahead of the April 15 options expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.