- Nearly $7.8 billion worth of Bitcoin options are set to expire by month-end, impacting market volatility.
- Analysts predict market consolidation as Bitcoin options approach expiry, with max pain set at $98,000.
Bitcoin options will expire later this month, worth approximately $7.8 billion. One of the largest events of the year, this is one investors should be ready for. For this expiration, the max pain price is set at $98,000. The term “max pain” describes the price at which most options contracts will expire worthless.
[DERIBIT] Bitcoin Options Worth $7.8 Billion Expire on Jan. 31 as Price Holds Above $98K Max Pain$BTC pic.twitter.com/yzqTN40yXy
— BecauseBitcoin.com (@BecauseBitcoin) January 24, 2025
What Does “Max Pain” Suggest for the Market?
For those involved in the derivatives market, “max pain” usually takes front stage. inside the framework of Bitcoin options, this price denotes the range inside which most options contracts fall worthless after expiration. Usually, as Bitcoin approaches its expiration date, its price moves toward this level most of the time.
Under this case, though, the price of Bitcoin at the time of writing is aboves $98,000. If it hold until expiration date, the call option holder can purchase Bitcoin at the lower contract price and subsequently sell it for profit. On the other hand, the holder of the put option will probably losses as the market price is higher than the contracted price.
Effect of Option Expiration on The Bitcoin Price
The price of Bitcoin sometimes swings greatly in the run-up to significant option expiration dates. This results from changes in position by retail and institutional traders. The effect of the $7.8 billion options contract on the Bitcoin price will mostly rely on the state of market stance at the time of expiration.
Historically, big events like this can cause notable price swings. But with the current price distant from the “max pain” threshold, volatility can be more concentrated on minute fluctuations about the current price level. Still, traders should be alert since unanticipated price swings are possible.
Stability of Market Vulnerability
Though volatility is still an issue, the Bitcoin volatility index (DVOL) seems to be steady at about 60. This marks a reasonable degree of volatility when compared to some of the past significant incidents. But given such a big option value expiring, volatility might rise in the next days.
Luuk Strijers, CEO of Deribit, claims that new digital asset policies including changes to SAB 121 control could provide chances for fresh institutional capital to enter the Bitcoin market. He suggested this might give the derivatives market optimism for continuous expansion.
The occasion of Bitcoin options expiration presents chances as well as risks. Price swings can, on the one hand, endanger the portfolio of traders without a good risk management system. Conversely, for seasoned traders, this great volatility can be taken advantage of to profit from quick and forceful market swings.
This expiration shows great involvement of institutions and big traders in the Bitcoin options market since of its great value. A big issue for market players will be the general mood on the expiration date.
Price Movement Forecasts by Analysts
According to some analysts, until this event takes place, the Bitcoin market will be in a consolidation movement. BlackRock CEO Larry Fink, however, projected—as we had noted—that Bitcoin may reach $700,000 this cycle.
Besides that, CNF previously reported that Brian Armstrong, CEO of Coinbase, said at a World Economic Forum event that Bitcoin is “a better form of money than Gold.” In a separate interview, he also mentioned that following the depressing days of the Biden administration, the Trump government will bring crypto into a new era.
Meanwhile, at press time, BTC was trading at $104,263 after surging by 1.29% in the last 7 days.
