About 7.8 billion dollars to Bitcoin (BTC) options expire at the end of the month, and with the largest cryptocurrency trade well above the so-called maximum pain point, it is possible that Market Makers want to maximize their profits, will try to force the lower in the coming days.
Data from Deribit, the largest decentralized option exchange, shows that as much as $ 6 billion in nominal value is set to expire out of money, or without value when the contracts are closed on January 31 at. 08:00 UTC. As many as 50 % of these are put options that give holders right, but not duty, to sell BTC at a predetermined price within a specific time period.
“The maximum pain level of this outlet is $ 98K, with a significant market dynamic that is expected to affect price movements in the short term,” Deribit CEO Luuk Strijers told Coindesk. “The recent termination of SAB 121 allows banks to store Bitcoin, which potentially unlocks new institutional flows, while speculation about a message of a strategic Bitcoin reserve adds an additional layer of market expectation.”
Put holders were most likely either uncovered against downward risk or made bearish bets with the uncertainty of President Donald Trump’s deployment.
The maximum pain price is where the option buyers experience the biggest losses, while Market Makers, the other side of the transaction, earns the most. Prices often tend to move towards the maximum pain price as the outlet approaches, which means $ 98,000 is the most important level to monitor in the coming week.
“Next week Friday’s expiry of BTC options represents a remarkable event as approximately 74,000 contracts expire. The total nominal open interest rate for BTC options is now $ 28 billion, of which 7.8 billion USD has been set to expire, with about 22 , 6 % in-the-Money (ITM), which potentially triggers Delta covering streams in the market.
DVOL is the Deribit index for tracking Bitcoin Implicit Volatility (IV). Coindesk research has noticed that IV hit the highest level on January 20 since August due to Bitcoin bread for new records.
