What the 28 January Options Expiry Means to Bitcoin (BTC) Price

  • BTC’s open interest volume amid expiry date shows high bearish sentiment within the marketplace.
  • Bitcoin options worth about $2 billion will expire before the weekend.
  • Remember, options expiry previously correlated with price crashes and massive liquidations.

The 21 January options expiry had priced in the crypto market plunging. The options expiry that involved the open interest of nearly $600 million appeared to weigh on the industry, translating to volatility among most crypto tokens.

Bitcoin’s Direction

Bitcoin price slid towards the $33,000 swing low after the leading crypto plummeted under the psychological zone of $40,000. That had trading platforms recording significant liquidations, with BTC positions worth nearly $292 million. That way, Bitcoin declined by more than 50% from its ATH on 21 November, presenting its most significant fall.

Bears benefitted from the 21 January options recovery, dragging BTC price beneath the $40K level. Remember, the maximum pain zone stood at $41,000, the level where Bitcoin would lead to financial losses for many options holders at termination.

As maximum pain means the option’s price where most options contracts expire worthlessly, the narrative indicates that BTC will move to the max pain level as it nears option expiry.

The theory showed market makers would try to hedge against open interest. They will do that by longing or shorting futures markets. Meanwhile, market makers have a massive incentive to alter spot prices closer to the max pain price.

Bitcoin options worth nearly $2 billion will expire on 28 January. That comes as speculation concerning the latest volatility in the marketplace increase. Coinglass, a cryptocurrency analytic platform, shows open options contracts valued at more than 200,000 BTC. Though ‘open’ interest indicates fewer puts than calls, expiry date volume suggests bearish sentiment.

Cryptocurrency experts expect BTC price to print a bottom following 28 January options expiry. Remember, this is the last massive options expiry date as far as open interest and volume are concerned this month. Moreover, this time’s maximum pain sat at $42,000.

The total BTC options open interest stood around $2 billion in 2018 December, which attracted a market crash that had Bitcoin plummeting to $3,160. The crypto registered a low a day after options recovery. Moreover, BTC created a bottom following the 2020 March expiry.

Bitcoin might witness a swift bounce to the resistance level around the maximum pain price in the $40,000 – $42,000 range before plummeting again to print a bottom near $30,000. Remember, previous data indicate Bitcoin bottomed the initial trading day after options expiry.