Bitcoin price stalls in April, but $4.2B options expiry may revive run
April 29, 2021. Summarized by summa-bot.
Compression ratio: 22.6%. 2 min read.
What’s interesting about this particular options expiry is that the current max pain price for the expiry is $54,000, which is very close to the current trading price. The max pain price is the price at which most options are rendered worthless, thus leading to the loss of the option premium for the options holders. Although, in this situation, options writers stand to gain.
On April 29, over $4. 2 billion worth of Bitcoin (BTC) options contracts will expire.
Cointelegraph discussed this with Robbie Liu, market analyst at OKEx Insights — the research team at cryptocurrency exchange OKEx. He stated that “A huge expiry alone does not indicate that the market is bullish or bearish, but it did restrain the price upswing when the previous quarterly options expired at the end of March.
“The current max pain price of the April 30 expired options is at $54,000, but it’s skewed by the impossible to reach $80,000 calls, which have the largest open interest at the moment.
For instance, the expiry on April 23 caused 27,000 BTC in options to expire.
Liu explained that the impact of the April 23 expiry was seen directly in the price of Bitcoin: “Bitcoin experienced a lot of selling pressure last Friday and the price managed to get pushed below $50,000 at the time of option settlement, at 4pm HKT [8:00 am UTC].
Options are a fraction of the total market and are rationally unlikely to affect spot price dramatically, but that has not stopped traders and investors from waxing poetic about price suppression and ‘max pain’ into the expiration week at the end of each month. ”
Ki Young Ju, CEO of crypto analytics firm CryptoQuant, told Cointelegraph: “Bitcoin’s options market is still relatively small for the expiry to have a sizable impact on the spot price. ”
As the debate continues over the impact of the Bitcoin options market on the price of BTC in the long term, analyzing the price trends of the underlying asset shows an interesting aspect.
While the upcoming $4. 2 billion options expiry might not lead to much of an economic impact for options holders, it is highly likely that after the options expiry, the downward pressure on BTC will move away from the current max pain price of $54,000.