Impact of Bitcoin Options Expiry and Large-Scale Selling by Whales
The Bitcoin market was poised for a significant event as a substantial number of Bitcoin options contracts were nearing expiration. This impending development was intricately linked to recent fluctuations in price trends and has the potential to escalate market volatility. Traders are expected to adjust their positions in response to the evolving market conditions following the anticipated expiry, thereby influencing market dynamics significantly.
Bitcoin Gears Up for Options Expiration
An analysis of Bitcoin options conducted by CryptoCrypto has revealed that approximately 18,000 Bitcoin options contracts, valued at about $1 billion, are set to expire on the 5th of July. The current put/call ratio in the BTC derivatives market stands at 0.65, suggesting that there are nearly double the number of call (long) contracts expiring compared to put (short) contracts.
Moreover, the max pain point, the price level at which the most significant losses would materialize, is positioned at $61,500. This level is notably higher than the present spot prices, particularly in light of the substantial market downturn witnessed earlier this week. Additionally, data from Deribit indicates a substantial amount of Open Interest at higher strike prices, with $532 million at a $90,000 strike price and $665 million in open interest at $100,000.
Notably, the market has been experiencing notable downward pressure due to whale sell-offs, further exacerbating the impact on prices.
Potential for More Bitcoin Options Expiry
An examination of Bitcoin’s supply distribution by CryptoCrypto has shown that whales have been actively reducing their holdings recently. Specifically, wallets holding between 100 to 1,000 BTC and those with 10,000 to 100,000 BTC have witnessed significant reductions in their balances over the past few days.
The collective sell-off activity from these whale wallets has amounted to millions of dollars worth of Bitcoin. Presently, there are approximately 13,700 wallets in the 100-1,000 BTC range and around 101 wallets in the 10,000 to 100,000 BTC range. This notable reduction in holdings signifies a broader shift in sentiment among major Bitcoin investors.
Bitcoin Enters Oversold Territory
An evaluation of Bitcoin’s Relative Strength Index (RSI) on the daily timeframe chart indicates that it has entered oversold territory, with the RSI below the 30 mark. Bitcoin is currently trading around $53,300, below its long moving average (represented by the blue line).
Originally serving as a long-term support level, the blue line has now transformed into a resistance level following recent price declines, reflecting the prevailing bearish market sentiment. This shift is significant in the context of the large volume of Bitcoin options expiring today, potentially impacting trading strategies and market sentiments.