Analysts are suggesting that the record $6 billion in options due to expire on Friday, March 26, could add increased short-term selling pressure and volatility to markets.
According to derivatives data platform Bybt, over $5.5 billion in options contracts due to expire today, and previous expirations have impacted spot markets.
Options are a little like futures in that the derivatives contracts give traders the right but not the obligation to sell or buy an asset for a predetermined price.
Analysts Eye Bitcoin Max Pain
The last Friday of the month has been significant for Bitcoin prices as it has dropped an average of 2% in the week leading up to the last three months’ last Fridays according to The Defiant. It added that the weeks following have averaged 12% gains.
Data from Bybt indicates that 90% of the open interest comes via the Deribit derivatives platform, and the “max pain” level is $40K. Open interest refers to the total number of outstanding derivative contracts that have not been settled. Max pain is the price at which option sellers will owe the least amount of money to option buyers.
“The max pain price is more than 10K below BTC’s current price, a sign there may be selling pressure until Friday.”
Co-founders of analytics platform Glassnode, Jan and Yann, added that price expectations for April are high:
This Friday $6 billion in options contracts are set to expire. #Bitcoin price expectations for April are high with lots of investors placing their new bets on $80k. pic.twitter.com/ …
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