Nearly $2 billion worth of Bitcoin options are set to expire later today
A large volume of Bitcoin options is about to expire, which could affect the next short-term price movement of BTC.
Bitcoin options contracts worth $1.8 billion are set to expire today. This could affect price movements as Open Interest has topped 300,000. Open Interest (OI) is the total number of outstanding derivative contracts that have not been settled.
Bitcoin options are contracts that allow traders to speculate on the price of BTC. They allow traders to buy or sell Bitcoin at a specific price, the strike price, on a specific expiration date.
Bitcoin Options Put/Call Ratio
Industry analyst Colin Wu reported that the put/call ratio was 0.66. However, Deribit currently has a 24-hour ratio of 0.81, meaning longs and shorts are more closely aligned.
Generally, a ratio of 0.7 or higher means that traders buy more puts (shorts) than calls (longs). This suggests that bearish sentiment may be building in the market.
The put/call ratio is calculated by dividing the number of traded put options by the number of traded call options.
A put option is a contract that gives the trader the right, but not the obligation, to sell or short the asset at a predetermined price within a specified time frame. A call option is the same, but gives the buyer the right to purchase or extend the asset.
Furthermore, a put/call ratio of 1 indicates that the number of buyers of calls is the same as the number of buyers of puts.
According to Deribit, the last major contract expiry was at the end of December when around 135,000 contracts were liquidated. At that time, BTC prices fell by only 1%. However, they were already at the bottom of the market cycle.
The drop could be more significant this time as the asset has rallied 45% since that bottom.
BTC Price Outlook
With current BTC prices at $23,900, the bears are struggling to push prices below this level. However, BTC is currently falling back, losing 2.4% in the last 24 hours.
Therefore, there could be further downward momentum today before the options expire. In addition, the bulls did not expect the four rejections of $25,000 in the last week either.
BTC has now eroded all gains of the past week and there is little support below today’s level, down to around $23,500.
Disclaimer
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