$630M Bitcoin Options To Expire: Will BTC Price Drop?
TL; DR
There was no sudden change of BTC price after $630 million worth of Bitcoin options expired on 21 July.
Around 21,000 BTC options that expired on 21 July had a put/call ratio of 0.41.
During July Bitcoin has failed to maintain a price momentum above $30,000.
Introduction
The expiry of cryptocurrency derivatives like ETH or Bitcoin options usually cause a buzz in the market. If you are a Bitcoin trader, you might have heard that 2.1k Bitcoin expired on Friday 21 July, something that has led some analysts to forecast BTC price movements for one or more weeks. In this guide we shall discuss the effects of the expiration of the BTC options as well as the short-term Bitcoin price outlook.
21K Bitcoin Options Expire
More than 21,000 Bitcoin option contracts with a notional value of $630 million expired on 21 July. This batch of BTC options had a maximum pain of $30,250 which was slightly higher than the spot price at that time.
As a fact, the max pain is the price of the most open contracts and the point where most losses occur when they expire. Another important metric that relates to crypto options is the put/call ratio. We calculate this ratio by dividing the number of short-seller contracts or puts by the number of long seller contracts or calls.
If the value of put/call ratio is below 1 it indicates a bullish market sentiment since there are more call contracts than put contracts. If the value of the put/call ratio is above 1 it means there are more put contracts than call ones. This indicates a bearish market sentiment.
For the 21k BTC options that expired on 21 July the put/call ratio was 0.41 showing a bullish market sentiment. The following diagram summarizes the state of Bitcoin options the market had in the closing week of July and what will be on the market in August and September.
As The Graph indicates, around 21K BTC options expired on 21 July. On the other hand, more than 60,000 BTC options expired on 28 July. It is also important to note that over 180,000 ETH options, with a max pain of $1,900 and a put/call ratio of 0.43 expired around the same time.
Pertaining to the state of the market in the third week of July Greekslive said, “The market was generally negative this week, with selling July calls virtually monopolizing the market volume, and as we mentioned in last week’s analysis, the options data suggests that the rally is clearly unsustainable.”
It added: “The position is very concentrated in the call options, the current market participants are very not optimistic about the subsequent rise, but there is no incentive to short futures, selling calls became the only choice.”
How the Price of BTC Has Responded to the 21K Bitcoin Option Expiry
The price of Bitcoin changed a few days after the expiry of BTC options on 21 July. Initially, the price rose from $29,749 on 21 July to $30,271 on 23 July. However, on 23 July there was a Bitcoin price drop from $30,271 to $29,045.
As the graph shows, the price of BTC only dropped on 24 July, which may not be clearly attributed to the expiry of the options on 21 July.
However, according to a recent review of the price of BTC, it was noted that three out of four recent BTC options that expired led to significant price movements as the next graph indicates.
As the above diagram indicates, the price of BTC changed after the expiry of bitcoin options. In most cases, the price dropped a few hours after the expiry of the options. However, there has always been a slight probability of an upward price rise.
Bitcoin Price Outlook
As had been the trend for the greater part of July, Bitcoin failed to maintain its momentum above $30,000 as it retreated by 1% to $29,830. The following graph shows the price movement of BTC on 20 to 21 July.
As the above diagram shows, On 20 and 21 July the BTC price moved sideways, fluctuating between $29,500 and 30,000. That came after a sharp price fall that occurred on 20 July when it dropped from $30, 250 to $29,750. By 21 July its price had fallen by 5% from its previous week’s high. Read also: BTC Price Prediction & Forecast for 2023, 2025, 2030
How to buy BTC at Gate.io
You can buy BTC at Gate.io exchange using credit cards, bank transfers, Gate Card, Gate OTC or P2P trading. However, in order to buy crypto at Gate.io you should have a verified account. To purchase Bitcoin, go to the “Buy Crypto” section and select your payment method such as Credit Card.
From there, you follow the leads you get.
Conclusion
There was no sudden change in the price of BTC after the expiry of Bitcoin options on 21 July. Instead, its price rose after two days but fell significantly the day after. Nevertheless, the price of BTC is range-bound. In general, however, the price of Bitcoin changes shortly after the expiry of BTC options.
