Options worth a total of $6.5 billion will expire on May 31, with nearly 90% of the strike prices set at $70,000 or above. The maximum pain point is at $65,000, so be cautious of volatility.
With the approval of the Ethereum spot ETF and the changing stance of US presidential candidates on cryptocurrencies, the cryptocurrency market seems to be heating up. Bitcoin has risen from around $57,000 at the beginning of the month to a high of about $71,000, a 24.6% increase.
Currently, Bitcoin is oscillating between $68,000 and $70,000, with a temporary drop of 0.2% to $68,556 in the last 24 hours. It remains to be seen when it will establish a clear direction.
Bitcoin Bulls Too Optimistic, Betting Above $70,000
However, looking at the options data expiring at the end of this month, many investors have a more optimistic expectation for Bitcoin’s rebound this month. According to data from the options trading platform Deribit, nearly 90% of the Bitcoin options expiring on May 31 have strike prices set at $70,000 or above. This indicates that the majority of investors are betting that Bitcoin will significantly rise before the end of May.
Since the current market price of Bitcoin is around $68,500, there is still a gap between the strike prices of these bullish investors and the market price. This means that unless there is a significant rally, these buy call options are likely to expire worthless, resulting in a loss of investors’ premiums.
Currently, the Bitcoin options expiring on May 31 on Deribit are as follows: a total of $4.693 billion expiring (if including other exchanges, the total is $6.5 billion), with a call-to-put ratio of 0.6. The maximum pain point price is $65,000.
BTC options expiring on the 31st
If Bitcoin breaks $70,000, the BTC bulls could have a potential profit of $270 million.
Further analysis shows that on May 31, if the price of Bitcoin remains around $67,800, the situation in the options market would be as follows:
The total value of open call contracts would reach approximately $135 million.
The total value of open put contracts at the $68,000 strike price would be about $145 million.
This balanced configuration indicates that the market does not have a strong expectation for a clear direction in price. However, both bulls and bears have enough economic incentives to push the price in their favor before the options expire (usually bears have a stronger influence).
Here are two scenarios:
If the price of Bitcoin drops to $65,900, put options could have a profit potential of $95 million.
On the other hand, if the price rises to $70,000 or higher, call options could have a potential profit of up to $270 million.
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