$6.4B Options Expiry Triggers Bitcoin Price Recovery

Over $6.4 billion options contracts expired today, sending Bitcoin (CRYPTO: BTC) on an upward price trajectory once more, according to a crypto derivative exchange Deribit.

What Happened: The market-leading cryptocurrency was trading at $53,930 at the time of writing, gaining 1.2% within minutes of the contracts expiring.

Bitcoin’s price dipping to under $51,000 yesterday was believed to have been primarily fuelled by selling pressure from those with short positions.

Why It Matters: The majority of these contracts were traded on Deribit, which leads the Bitcoin option’s market by trading volume.

“Majority of puts will expire worthless,” noted Deribit earlier this week, adding that it doesn’t necessarily mean that they haven’t served their purpose as protective puts could be an insurance policy.

As March options have just expired, the April outlook is more bullish.

With nearly $2 billion in open interest and 0.79 put/call ratio. pic.twitter.com/MWaRyiXTb0

— unfolded. (@cryptounfolded) March 26, 2021

Price expectations for April, however, were set a lot higher as the majority of investors placed their bets on call options set to expire at the end of next month with a strike price of $80,000.

Major U.S.-based crypto exchange Coinbase is set to go public in April via a direct listing on the NASDAQ. Options traders appear to have priced in the effects of listing when placing their bets on the price of Bitcoin over the coming weeks.

Here’s what has happened to #Bitcoin post option-expiry over the last 5 months pic.twitter.com/rn94ffozSW

— MacroUnpuzzled (@MacroUnpuzzled) March 25, 2021

Historical data also indicates that the price of Bitcoin has rallied following a pullback in price around the end-of-month options expiry.

“BTC derivatives have been the primary drivers of spot markets for years. At least since 2018, derivatives move spot more than spot moves derivatives,” CEO of crypto exchange FTX Sam Bankman-Fried told Cointelegraph.