$1.5B in Bitcoin options expire tomorrow and the bulls could be getting a discount as we are reading more in our latest Bitcoin news today.
Bitcoin options contracts worth 41.5 billion will expire on Friday on unregulated derivatives exchange Derbiti so with the BTC price rebounding 10% in the past month, bullish traders will get a sizeable discount. Bitcoin options contracts allow traders an option to buy BTC at a set price and the contracts can be traded over the entire month until last Friday which means who purchased contracts can wait until the last minute to see how the prices shake out. At any point, they can exercise the option or sell it to someone else but if neither of that happens, the option expires.
This Friday 8 AM UTC, 38.6k $BTC are set to expire on Deribit with a notional value of $1.44 billion.
Max pain price $35,000, Put/Call ratio: 0.86 pic.twitter.com/QBwxExZ8w2
— unfolded. (@cryptounfolded) July 27, 2021
The max pain price for this period is $35,000 per Deribit which refers to the point at which overall traders get the least bang for their money. In essence, it is the area around which they will be better off just purchasing BTC rather than having wasted money buying the options in the first place. As per the crypto data provider Nomics, BTC is now trading at $39,700 as an improvement on the $35,000 which it was trading tone month ago. As a result, most traders who purchased options as crypto prices were swooning stand to get a discount if they exercise their options on the market which recovered. They will purchase at $35,000 tomorrow instead of $39,000 and these purchases could push the price of BTC higher.
The put/call ratio of 0.86 which is used to measure investor sentiment, is bearish giving BTC bulls a chance to clean up so, in a nutshell, the call options are contracts to exchange BTC at a certain price if the buyers wish. The options give a person an option to sell at a certain price and when people are buying more calls, it means that the investors are expecting the price to go up. Once they buy more puts, they are looking for a way to cash out if the price crashes.
Speaking at the end of April $3.6 billion in BTC options expired according to Arcane Research analyst Vetle Lunde who said that options expiries can move on the market at a time when people are holding onto their BTC:
“We’ve seen Bitcoin rallying with force following all monthly options expiries in 2021, so the market action suggests that large expiries provide a short-term anchor for the price.”
As the $1.5B bitcoin options expire, we can see the next price movement that the number one cryptocurrency will perform.
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