Bitcoin Options contracts worth $6 billion are set to expire today as all eyes are set on Bitcoin price. Historically, Bitcoin Options expiry has turned out to be a bullish event as the past three months have seen BTC price first register a correction post expiry of contracts followed by a bounce-back of 80%, 99%, and 44% respectively.
6B in Bitcoin options contracts expire today, a record.
The last three months have seen price suppression into the close, followed by price increases of 80%, 99%, and 44%.
April has historically been the most bullish month for $BTC.
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— The Wolf Of All Streets (@scottmelker) March 26, 2021
Bitcoin price also shows higher volatility in the week leading up to the expiry of Bitcoin contracts which was evident as Bitcoin price fell to $50,818 yesterday falling over 6% for the day. The price has recovered since then and currently trading at $53,209 with a 2% rise over the past 24 hours. The month of March is also seen as the bearish month given the 2020 March mayhem that saw BTC price retrace by nearly 50%, while the month of April is considered one of the most bullish ones.
Bitcoin price this year has recorded a new ATH every month followed by a sharp correction ranging from 10%-25% and then a bounce back. BTC reached a new ATH of $61,683 this month and fell below to sub $50K levels since then.
The ‘Max-Pain’ For Today’s Expiry is $44,000
Max-Pain is a market theory that suggests the price of bitcoin would tend towards the bearish side as it nears expiry to inflict maximum pain to Bitcoin Option holders who are primarily institutions and Wall Street investors with ample capital. The max-pain price for March expiry is $44,000, however, it is also important to note that the market doesn’t necessarily move towards the max-pain point even if the bearish pressure is high.
Luuk Strijers, CCO of Deribit explained,
“That does not mean the market will move to $44,000 by the end of this week, but it does imply that after Friday this potential downward pressure no longer exists.”
The Bitcoin Options Expiry date is often followed by a bullish burst especially if the price manages to steer clear of the max-pain range. Bitcoin price yesterday did fall to $50K levels, but it managed to bounce back since then to rise above $53K.
