Some 7.8 billion dollars in bitcoin options (BTC) beat at the end of the month and, with the largest cryptocurrency quoting well above the so -called maximum pain point, it is possible that market creators who seek to maximize their profits try to force it go down in the next few days.
The detribit data, the largest exchange of decentralized options, shows that up to $ 6 billion in notional value will expire out of money, or without value, when contracts are closed on January 31 at 08:00 UTC. 50% of them are sale options, which give the holders the right, but not the obligation, to sell BTC at a default price within a specific period of time.
“The maximum level of pain for this expiration is $ 98,000, and an important market dynamic is expected to influence pricing movements in the short term,” the CEO of Deribit, Luuk Strijers, told COINDESK. “The recent termination of SAB 121 allows banks to guard Bitcoins, which could unlock new institutional flows, while speculation about a Bitcoins strategic reserve announcement adds an additional layer of anticipation to the market.”
Most likely, the owners of sales options were covering against the risk of falling or making bassists in the face of uncertainty surrounding President Donald Trump’s possession.
The maximum price of pain is where buyers of options experience the greatest losses, while market creators, the other side of the transaction, obtain maximum benefit. Prices often tend to gravitate towards the maximum price of pain as the expiration approaches, which means that $ 98,000 is the key level to monitor during the next week.
“The expiration of the BTC options on Friday of next week represents a remarkable event since approximately 74,000 contracts are overcoming. The total notional open interest of the BTC options is now $ 28 billion of which, $ 7.8 billion are about to expire, with approximately 22.6% in money (ITM). “Strijers said.
DVOL is the Deribit Index to track the implicit volatility (IV) of Bitcoin. Coindesk’s research has indicated that IV reached the highest level on January 20 since August because Bitcoin reached new historical maximums.
