Crypto on Edge: Will Huge $8.3B Bitcoin Options Expiry Trigger Another Dump?

Around 91,000 Bitcoin options contracts will expire on Friday, Jan. 30, with a notional value of roughly $8.3 billion. This event is much larger than the rest this month because it is the last one for January.

Crypto markets have lost around $215 billion since the start of the week, as the Federal Reserve kept US interest rates steady at 3.5% to 3.75%, still much higher than its 2% target. Geopolitical tensions in the Middle East also reignited, sparking further fears.

Bitcoin Options Expiry

This week’s big batch of Bitcoin options contracts has a put/call ratio of 0.54, meaning that there are more expiring calls (longs) than puts (shorts). Max pain is around $90,000, according to Coinglass, which is above current spot prices, so many will be out of the money on expiry.

Open interest (OI), or the value or number of Bitcoin options contracts yet to expire, remains highest at $100,000, which has $1.9 billion at this strike price on Deribit. There remains around over $1 billion in OI at $75,000, $80,000 and $85,000 as bearish bets mount.

Total BTC options OI across all exchanges has been climbing since the beginning of the year and is at $58 billion.

“Expiry could amplify moves around key levels, especially around the pain zones,” said Deribit, and that appears to be happening as spot markets tank.

In addition to today’s batch of Bitcoin options, around 440,000 Ethereum contracts are also expiring, with a notional value of $1.3 billion, max pain at $3,100, and a put/call ratio of 0.74. Total ETH options OI across all exchanges is around $35 billion.

This brings the total notional value of crypto options expiries to around $9.6 billion.

Spot Market Outlook

Crypto markets melted down during the Friday morning trading session in Asia, with total capitalization dropping below $3 trillion for the first time since mid-December. More concerning is that it has fallen to its lowest level since April, suggesting that a bear market is fully underway.

Bitcoin plunged through support, crashing 8% on the day in a fall to $81,300 at the time of writing, its lowest level since April. Ether prices tanked 9%, falling to around the $2,700 level, and the altcoins were a double-digit bloodbath.

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