On December 27 at 8:00 a.m. UTC, Bitcoin (BTC) traders prepare for a $14.27 billion high-stakes options expiry. The recent decline in the cryptocurrency’s value below $100,000 caught bullish traders off guard, allowing negative Options Expiry Market participants to take over and possibly hastening a price correction in the run-up to January 2025.
Deribit controls 72% of the Bitcoin options Options Expiry Market, and their data shows that out of the total open interest, $8.45 billion is for call options (to buy Bitcoin), while $5.82 billion is for put options (to sell Bitcoin).
Bitcoin Derivatives Risks and Market Dynamics
You should only deal with capital you can afford to lose because of the substantial risk of trading derivatives. Please make sure you completely grasp the risks involved and get independent advice if needed before trading derivatives; they may not be appropriate for all investors. Before buying from us, read our Product Disclosure Statement (PDS), which is available on our website or in our offices if you ask. Spreads are offered by raw spread accounts.
Due to Bitcoin’s remarkable 50% recovery over the previous quarter, many put options are now practically worthless and have less of an impact on market dynamics.
Cryptocurrency Open Interest Period traders closely monitor Bitcoin’s price as the expiration date approaches, speculating whether bullish forces will leverage the recent decline to push the market downward or whether the price can regain its upward momentum.
Bitcoin Options Expiry: $90,000 Strike and Market Impact
A big option expires just one day away, and Bitcoin trades above $95,000. Simultaneously, the majority of calls open at the $90,000 strike price. This strike had the most open interest in call options, which means that traders were optimistic about Bitcoin and thought its price would go higher than this. Now that Bitcoin’s price is well over $90,000, the options are “in the money,” allowing their holders to purchase Bitcoin at a discount compared to its current Options Expiry Market value.
Bitcoin is open to interest at the strike price. Deribit is a source. Put simply, the large amount of open interest at the $90,000 level indicates that numerous traders were betting on a rally beyond that level, and their predictions came true. Thus, profit-taking could emerge, with some choosing to exercise their options in order to earn. Meanwhile, market makers may be compelled to purchase Bitcoin on the spot or futures markets in order to offset their exposure.
Bitcoin Volatility at $95,000 Market Sentiment
Traders may observe temporary price volatility around the $95,000 level as profit-taking and hedging actions adjust or terminate huge positions. Since Bitcoin’s present price has substantially exceeded the previously established “max pain” price of $85,000—at which point the majority of options would expire worthless—it is no longer a useful metric.
Everyone will be watching whether Bitcoin can continue its ascent or consolidate around the $95,000 mark. The $90,000 strike suggests high bullish sentiment, which could lead to sustained confidence in the Options Expiry Market even though the price movement is currently more choppy.
Bitcoin’s $90,000 Call Options Price Drop Impact
At present, the most actively traded $90,000 call options would be “out of the money” if Bitcoin’s price drops below this amount. Because of this, the value of these options would drop, and traders who staked $90,000 on Bitcoin would lose money.
If the price drops below $90,000, traders with these options may decide not to use them, which might mean less demand for buying from market makers who were planning to hedge their holdings.
Option holders who can sell Bitcoin at a higher strike price will profit if the price drops below $90,000. Option buyers’ perception of these contracts as “in the money” would entice pessimistic investors to cash in. The selling pressure could intensify, further accelerating Bitcoin’s decline.
Bitcoin Price Breakout Fades Below Key Support
Recent price action for Bitcoin has shown signs of a possible price recovery. The cryptocurrency price broke out of a falling wedge pattern after a period of consolidation between convergent trendlines. Bitcoin’s price broke out of its range and began to rise sharply. Every day, TradingView updates the Bitcoin/US Dollar price chart.
TradingViewBut the price’s breakout momentum is fading as it’s retreated below important support levels near $96,400 and $97,830, respectively, which are denoted by the 200-day exponential moving average (blue wave) and the 50-period EMA. For Bitcoin’s price to continue rising, it must recover these assets. Otherwise, it seems like there’s a decent chance it will fall below $100,000.
FAQs
What role does Deribit play in Bitcoin options?
Deribit controls 72% of the Bitcoin options market, with a significant portion of open interest in both call and put options, impacting market movement.
How does the $90,000 strike price affect Bitcoin's market?
With a large amount of open interest at the $90,000 strike, traders are betting on a rally, which could lead to profit-taking and market makers purchasing Bitcoin to hedge.
What happens if Bitcoin's price falls below $90,000?
If Bitcoin's price drops below $90,000, many call options could become "out of the money," causing a decrease in their value and potentially leading to selling pressure.
Why is Bitcoin's breakout momentum fading?
Bitcoin's breakout momentum is fading due to its retreat below key support levels around $96,400 and $97,830, which are crucial for maintaining upward price movement.
