Bitcoin Faces Massive Options Expiry Test Ahead of $6.36 Billion Deadline
Bitcoin is on track to face a massive $6.36 billion options expiry test today as it hovers near $80,000.
The setup could leave the OG cryptocurrency vulnerable to large price swings as traders close, roll or hedge positions in response to the expiry.
Roughly 81,000 contracts are set to expire, and max pain is at $69,000, meaning that's where the combined payout to option holders would theoretically be lowest. However, this doesn't mean Bitcoin will fall there.
The options event is seen as capable of producing sharp price swings in either direction, with call holders standing to benefit if BTC holds near $80,000 or climbs. Conversely, dealer hedging could deepen a decline toward $70,000 or below if selling takes hold.
In addition to the expiry test, Bitcoin's rally is also being questioned on the demand side due to short covering. QCP Research reported that part of BTC's recent rise came from short covering, with open interest falling as prices climbed.