About $7.8 billion worth of Bitcoin options is set to expire on January 31 at 08:00 UTC. Bitcoin is currently trading above the “max pain” price of $98,000, which could cause market makers to push it lower very soon.
The term “max pain” refers to the price point where options buyers suffer the most losses, while market makers gain the most. As options expiry nears, prices often gravitate towards this level, making $98,000 a key price to watch.
According to data from Deribit, roughly $6 billion of options will expire “out of the money.” or without value. Of this, 50% are put options, which give holders the right to sell Bitcoin at a price. Such positions were probably used for hedging or to bet against Bitcoin, particularly with recent market volatility.
Luuk Strijers, CEO of Deribit, said, “The max pain level for this expiry stands at $98k, with significant market dynamics expected to influence price movements in the near term.”
Strijers also pointed out that the recent lifting of SAB 121, a regulation that now allows banks to hold Bitcoin, may pave the way for institutional investment. This may increase the demand for Bitcoin, which could drive its price higher. Additionally, the anticipation of the upcoming Bitcoin reserve announcement is also charging the market.
“Next week Friday’s BTC options expiry represents a notable event as approximately 74,000 contracts are expiring. Total BTC Options notional open interest is now $28 billion, of which $7.8 billion is set to expire, with approximately 22.6% in-the-money (ITM), potentially triggering delta hedging flows in the market. While DVOL is currently around 60, aligning with year-end levels,” Strijers said.
Meanwhile, Bitcoin recently hit new all-time highs this month, pushing implied volatility to its highest level since August 2024. Traders are holding on to institutional investors as well as any potential Bitcoin strategic reserve announcement.
As the option inquiry date nears. Many traders will be monitoring any price movement as the max pain point becomes more critical for the coming days.
Also Read: MicroStrategy’s Sudden Bitcoin Tax Problem Could Cost Billions
