Bitcoin Drops After $1.6B Monthly Options Expiry

bitcoin 7 30 2021 LearnCrypto Powered By Wyckoff SMI 2022

The “max pain point” for the July expiry was $35,000.

Bitcoin faced selling pressure on Friday after Deribit, the world’s largest crypto options exchange by volume and open interest, settled monthly options contracts worth $1.6 billion.

The cryptocurrency slipped from $39,800 to $38,500 after 08:00 UTC (4 a.m. ET), the designated settlement time on Deribit. A total of 41,000 contracts expired, of which 22,000 were calls options, and the rest were put options, according to Deribit data.

While the exact nature of the expiry-related flows is not known yet, prices frequently become more volatile after expiry.

Option expires have gained prominence this year, with the cryptocurrency gravitating toward the so-called max pain point in the lead-up to settlement, and seeing notable directional activity post-expiry. That point is the strike price at which the most open options contracts expire worthlessly. Sellers, typically institutions, try to push prices closer to the max pain point to minimize their losses.

“There is always additional activity before and just after the expiry, especially for relatively larger ones like the July expiry,” Luuk Strijers, chief commercial officer at Deribit, told CoinDesk.

During the bull run, bitcoin consistently saw pullbacks toward the max pain point ahead of expiry and resumed gains following settlement, as seen below.

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