Dawn For Bitcoin: $5 Billion In Options Expire And Could Push Price Towards $31,000
Still recording some green on small timeframes, the price of Bitcoin has remained above $30,400. Despite the recent selling pressure across the sector, the support around this level held, providing bulls a chance to fight back.
As of this writing, Bitcoin trades at $30,458 with sideways movement in the last 24 hours. The previous week, the number one crypto by market cap recorded similar price action while other cryptocurrencies experienced losses.
Bitcoin About To Explode?
Data from crypto options platform Deribit, shared by analyst Tom Dunleavy, shows that over $7 billion in these contracts will expire today, Friday 29th. In other words, today, option holders can exercise their right or obligation to buy/sell BTC and other assets at a specific price, depending on their contract.
Over $5 billion of the options contracts are based on Bitcoin, while the rest are based on Ethereum, as seen in the chart below. However, option holders could choose to “roll over” their contracts to a later date.
As a result, according to Dunleavy, spot prices could see a spike in buying pressure as major option players hedge their positions. This increased buying pressure could see BTC soaring above the $31,000 mark.
Via Twitter, the analyst stated:
Big options expiration date for both ETH and BTC tomorrow ETH: ~$2B notional BTC: ~$5B notional If these are rolled into more calls we should see spot buying from dealers to hedge their books; puts opposite story. Either way expect some vol (volatility).
As Dunleavy claims, the crypto market is poised for volatility, whichever direction. The chart above shows the Max Pain price for BTC options, which is $26,500.
Max Pain is the price Bitcoin must trade to deny most options traders from booking profits. In that sense, the BTC price will likely turn to the downside with a spike in volatility.
Beyond $31,000, What’s Next For BTC?
Analysis and crypto education firm Blofin recently posted a report on BTC’s short- and long-term risks and scenarios. The firm claims the recent rally was driven by a “hunger for positive news” and a “rebalancing” of internal liquidity.
In other words, crypto investors got bullish and took money from altcoins into BTC. However, there is still a liquidity issue within the sector that could limit any rally, but there is a silver lining in this scenario.
Blofin stated:
The decline in the price of BTC will be more limited, with a relatively small probability of falling below $28k, while the upward space is relatively large, and there is even hope for a rebound to $35k and above.
Cover image from Unsplash, chart from Tradingview
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