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  • Over $2.3 Billion Bitcoin Options Set to Expire This Week, Which Could Create Shock Waves.

Over $2.3 Billion Bitcoin Options Set to Expire This Week, Which Could Create Shock Waves.

Explosive Deadline: Brace Yourself for Over $2.3 Billion Bitcoin Options Expiring.

Over the past few weeks, Bitcoin has remained relatively stable, which is mainly due to the standstill we’ve seen in the financial markets. There have been growing levels of uncertainty in the broader economy, especially surrounding the looming U.S default crisis.

Just like any other phase in the market, a sideways market isn't inherently good or bad; it all depends on how you approach it. A sideways market represents a temporary pause or consolidation in trading activity, characterized by reduced trading and low volume. This consolidation is a normal occurrence after a significant trend in one direction, indicating traders' uncertainty about the market's next move. During this time, traders exercise caution and wait for the market to change its course before making any significant decisions. The longer traders observe the lack of a definite change, the more likely they are to push the price in a particular direction.

However, what happens after the consolidation is uncertain. The price may either continue moving in the same direction as before or change its course and trend in the opposite direction. Nevertheless, there might be indicators or clues that can help predict the likely direction of a breakout.

Crypto Option Expiry - What it means?

Billions in Bitcoin options are set to expire on Friday, giving speculators their last chance to either buy or sell. If many investors choose the latter, expect to see more Bitcoin available in the market, and prices would dump. If they exercise their option, it could push the price up.

According to Deribit data, the "max pain price" for Bitcoin is predicted to be around $27,000. This refers to the price where the total value of options still held is at its lowest. In simple terms, traders won't be getting much of a discount compared to buying Bitcoin directly on the open market. Plus, they might face some financial losses if they let their options expire. To add to the excitement, Bitcoin's price has dipped in the last 48 hours, hovering around $26,200. So, deciding whether to exercise the option will be a gametime decision for many traders

Bitcoin options contracts—which give traders a chance (but not the obligation) to buy BTC at a set price, can typically be traded up until the last Friday of each month. They offer different price levels at which traders can pull the trigger and buy the asset. Of course, each contract is structured differently, with different buy prices, depending on when it was bought. 


Now, let's not forget about Ethereum.

Its options are also expiring on Friday, with around 700,000 options reaching their expiration date. According to Deribit, the notional value of these options is over $1.3 billion, with a max pain price of $1,800. It's definitely going to be an interesting week!

What is the likely effect? Bullish or Bearish.

To understand where the markets will shoot following option expiries often depends on the overall market trend. As we’re writing this, Bitcoin has tanked nearly 5%, and much of the recent demand is fading rapidly.

This comes just a few weeks after Bitcoin was tormented with outrageous fees and hundreds of thousands of bitcoin were stuck on the network. We've covered that in another newsletter article, but in a nutshell, it was caused by something called Ordinals, which are like Bitcoin NFTs. Turns out, Bitcoin isn't really designed for day-to-day payments, so that sudden surge in demand completely through Bitcoiners off.

Naturally, this resulted in a sell-off, and many Bitcoin enthusiasts started questioning the capabilities of their beloved cryptocurrency. The question remains: Are these fears still lingering and not fully factored into the current market? Well, we're about to find out.

In my opinion, Bitcoin is likely to continue dropping. We’ve seen time and time again that BTC mirrors what the traditional financial markets do, and with the upcoming default crisis, option expiry, and new (+ old) fears, there isn’t much for to be bullish about now. Additionally, in the past, these option expirations have almost always resulted in a sudden crash. Let’s see if history repeats itself...

We love hearing all opinions, so please share in the comments below how you think the markets will react. Thank you!