Bitcoin The price drop ahead of Friday’s quarterly options sell-off has once again called into question the popular “maximum pain theory.”
The maximum pain level for this expiration sits at $72,000, significantly above current spot prices of around $61,700. On Friday at 8:00 ET, $10 billion worth of options will expire on Deribit, the world’s largest crypto options exchange.
Maximum pain, as the name suggests, refers to the price level at which options buyers (those who bought put and call contracts to protect themselves against volatility) would lose the most money at expiration. In that scenario, option buyers suffer maximum losses, while their counterparts who sold options (also known as writers) will benefit.
The theory suggests that prior to expiration, these option writers actively attempt to push the spot price toward the maximum pain level, effectively pinning Bitcoin there. Crypto social media has long embraced the idea, particularly after BTC seemed to gravitate toward peak pain ahead of several monthly and quarterly deals in 2020-2021. That pattern, although partly coincidental and driven by other market forces, helped solidify belief in the theory.
