Bitcoin Options Worth $7.8B Set to Expire at End of Month on Deribit
Some $6 billion of the notional value in bitcoin is currently set to expire out of the money.
Some $7.8 billion worth of bitcoin (BTC) options are set to expire on January 31, and with the largest cryptocurrency trading above the so-called max pain price, market makers may attempt to drive prices lower before expiration.
Data from Deribit, the largest decentralized options exchange, indicates about $6 billion in notional value will expire worthless when the contracts close at 08:00 UTC on January 31. Half of these are put options, which enable holders to sell BTC at a fixed price during a specified period.
“The max pain level for this expiry stands at $98k, with significant market dynamics expected to influence price movements in the near term,” said Luuk Strijers, CEO of Deribit. “The recent rescission of SAB 121 allows banks to hold bitcoin, possibly unlocking new institutional investments alongside speculation about a potential bitcoin strategic reserve announcement.”
Put option holders are likely either hedging against losses or making bearish bets amid uncertainties, particularly regarding President Donald Trump’s upcoming inauguration.
The max pain price is the level at which option buyers incur maximum losses while market makers profit the most. Prices often drift toward this level as the expiration date approaches, making $98,000 a crucial price point to observe in the following days.
“Next week, Friday’s BTC options expiry signifies a significant event as approximately 74,000 contracts are expiring. Total BTC options open interest is $28 billion, with $7.8 billion set to expire, of which around 22.6% are in-the-money (ITM), potentially causing delta hedging activity,” remarked Strijers.
DVOL, the Deribit index for tracking bitcoin’s implied volatility, recently hit its highest mark since August due to bitcoin’s surge to new all-time highs on January 20.
Tags: Bitcoin, Bitcoin Options, Deribit
