Bitcoin's Lofty Max Pain Suggests Higher Spot Prices as $5B Options Expiry Approaches

Key Points

  • Approximately $5 billion in bitcoin options contracts are set to expire on Deribit this Friday at 08:00 UTC.
  • The majority of these options, about $3.9 billion (78%), are out-of-the-money (OTM) due to a recent price drop below $90,000.
  • The max pain price for these options is at $98,000, significantly higher than the current spot price, potentially influencing market behavior.

Summary

This Friday, Deribit will see the expiration of around $5 billion worth of bitcoin options contracts, amidst a volatile crypto market. The recent decline in bitcoin's price below $90,000 has left most of these options out-of-the-money, with traders facing substantial unrealized losses. Specifically, 78% of the expiring contracts, amounting to $3.9 billion, are OTM, meaning they will expire worthless. The remaining $1.1 billion are in-the-money, predominantly puts, which still hold value. The market's volatility index, DVOL, spiked after bitcoin's sharp decline but has since retreated, indicating a temporary increase in market uncertainty. The max pain price for these options is set at $98,000, which is $10,000 above the current spot price. This discrepancy could motivate options sellers to push the bitcoin price towards this level to maximize their profits, potentially leading to increased market volatility and price movement towards the max pain level as suggested by PowerTrade.

coindesk
February 26, 2025
Crypto
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