Bitcoin (BTC) options worth $7.8 billion are set to expire at the end of the month, and with the cryptocurrency trading significantly above the max pain point, market makers may attempt to drive the price lower in the coming days to maximize profits.
Data from Deribit, the largest decentralized options exchange, reveals that $6 billion of the total notional value in bitcoin options is expected to expire out of the money, meaning these options will expire worthless. Half of these are put options, which grant holders the right to sell BTC at a predetermined price within a certain time frame.
“The max pain level for this expiry stands at $98k, and we expect significant market dynamics to impact price movements as the expiry date approaches,” said Deribit CEO Luuk Strijers. “The recent change in SAB 121 now allows banks to custody bitcoin, which could trigger new institutional flows, while the speculation surrounding a potential bitcoin strategic reserve announcement adds another layer of market anticipation.”
The put options likely reflect a hedge against potential downside risks or bearish bets made amid uncertainties surrounding President Donald Trump’s inauguration. The “max pain price” refers to the price point where option buyers experience the most significant losses, while market makers, on the other hand, profit the most. As expiration nears, prices often tend to move toward the max pain level, making $98,000 a key price point to watch in the coming days.
“Next week’s BTC options expiry is significant, with around 74,000 contracts expiring,” Strijers added. “The total BTC options notional open interest now stands at $28 billion, with $7.8 billion set to expire. Approximately 22.6% of these contracts are in-the-money (ITM), which could trigger delta hedging flows in the market. At the same time, DVOL is around 60, aligning with year-end levels.”
DVOL, Deribit’s volatility index, tracks bitcoin implied volatility (IV). CoinDesk research shows that IV recently reached its highest level since August, driven by bitcoin’s rally to new all-time highs.
