Bitcoin Slips to $52K, All Eyes on $6B Options Expiry can Refuel Bulls

Deepshikha  |  Mar 26, 2021

The largest-ever Bitcoin options expiry of $6 billion is due on March 26. Over $6 billion worth of BTC will expire on Friday across the exchanges, a total of 100,400 Bitcoin options will expire. The enormous expiry date carries the rapid growth in open interest in the BTC option markets. The total Open Interest (OI) across five crypto derivatives exchanges is $14.01 billion. 

Buyers are Stepping Back as Bitcoin Options Expiry Nears

Chad Steinglass, head of trading at CrossTower, said in an emailed comment that “This is a time to make sure that you have some dry powder and are not overextended.” “It seems as though buyers are stepping back, and instead of buying the dip are simply waiting on the sidelines to see what happens.”

The expiry will not lead to all options trading at once, as some of the strike prices seem highly unrealistic. Over the past week, Bitcoin has seen bearish price movements. It has gone from trading in the $60,000 range on March 19 to the $50,000 range on March 25. This drop has led investors to question the real value of Bitcoin and wonder if the bull market is coming to an end soon.

But the $6 billion worth expiry could lead to a change in this sentiment. Bankman-Fried, Chief Executive Officer at FTX further explained that more options writers are comfortable selling the downside than writing the upside, saying:

“The crypto industry is bullish on crypto (shocker!). You can see this in lots of ways — from positive futures premiums to perpetual funding rates to USD borrow rates; this is another sign of that.”

Bitcoin Price Predictions

Robbie Liu, market analyst at OKEx Insights;

“Major options expiries are often accompanied by an increase in spot volatility and the same goes for futures.” 

The max pain price for this expiry currently stands at $44,000.

The max pain price is the strike price at which there are the most puts and calls. Thus, this is the price where the maximum number of market participants will face financial losses. 

According to Liu, “The Max Pain at 44k creates a small downward pressure force on the spot. Once this pressure expires, then there is a greater possibility of an upward move. Some say that it is no coincidence that we have had big moves around the times of the big option expiries.”

Liu opined further regarding what the markets can expect after this historic options expiry:

“After every large expiry, the market is, in the short-term, free to move again, and given that we are in a broader bull market, price appreciation is the more likely outcome at the moment. However, the bigger the crypto market becomes, the more correlations it builds with various market segments, making it less predictable.”

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