Will the expiration of $780 million options affect the price of bitcoin?

A large number of Bitcoin (BTC) options are about to expire. We understand how this will affect the price of the underlying asset.

Bitcoin options are derivative contracts that allow traders to buy or sell BTC at a specific price on a specific expiration date. If the option holder decides not to buy or sell the asset, he is not required to do so. This makes options more flexible than futures, which obliges you to close a position regardless of profit or loss. The notional value of 29,000 contracts expiring in the near future is $780 million. We are looking into whether their expiration can provoke increased volatility in the market and affect the price of bitcoin.

The bears are gathering strength

According to Greeks.live, the ratio of put and call options on BTC is 0.81. This ratio is calculated by dividing the number of puts (short) by the number of call options (long). A value below 1 is considered bullish. However, Greeks.live warns that bears should not be discounted:

“Overall position data has been relatively stable, but the share of put options has started to increase. This means that bearish traders are gradually picking up strength after a long sideways move.”

Total open interest, i.e. the number of open contracts that have not yet expired, at the time of writing exceeds 308,000. The maximum pain point is at $27,500. This is the price of bitcoin, at which the asset will bring financial losses to the largest number of holders.

What is happening to the price of bitcoin

Over the past day, the price of bitcoin has dipped by 2% and is trading at $26,880. In the last couple of weeks, the asset has been consolidating after falling from a 2023 high of $31,000.

Markets are still sideways and support remains at current levels. However, if it is lost, BTC may fall to wait for a deeper correction – in this case, even the positive attitude of option traders will not help the asset.

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