According to data from Skew Analytics, more than 55,000 Bitcoin option contracts will expire this Friday, valued at $2.2 billion.
According to data from the derivatives exchange Deribit, Deribit holds most of the Bitcoin option contracts. In terms of BTC options, in terms of open interest, exchanges such as LedgerX, Okex, and CME have followed in Deribit’s footsteps.
Deribit will have 48,469 BTC option contracts (valued at US$1.95 billion) and 307,558 ETH options (valued at US$877 million) to expire tomorrow.
In the two weeks ending May 23, all open positions on expiry dates were almost halved to $6.5 billion.
This year, the settlement of monthly options contracts has become more and more important, and the “most painful point”-the strike price at the expiration of most open options contracts-is played before expiration (the last Friday of the month) The unresolved role.
For example, Bitcoin fell from nearly $60,000 to $50,000 in the six days before it expires on March 26, narrowing the gap between the spot price and the most painful point of $40,000 at that time. Bitcoin rebounded by $4,000 to $54,000, reaching its most painful point before expiration in April.
The most painful point will attract spot prices when it is about to expire. This is because option sellers, mainly institutions, sometimes try to push the price to the most painful point, thereby causing the greatest loss to option buyers.
The most painful point for Bitcoin options expiring on Friday is $50,000-more than 25% higher than the current price of $39,000. As Laevitas, a Swiss-based options analysis platform, wrote on Twitter, some investors bet that the most painful point effect will begin before settlement, pushing the price up to $50,000.
Compared with the previous Bitcoin option expiration, the upcoming settlement scale is relatively small. A record value of $6 billion in contracts expired at the end of March, and the exchange settled more than $4 billion in options early on April 30.
Therefore, before the settlement on Friday, the most painful point effect may not have much impact on the market. However, other factors, such as the recurring outflow of funds from crypto exchanges, may help the hard-hit cryptocurrency prices to recover.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.