The cryptocurrency market, already pressured by weakening institutional demand and macroeconomic headwinds, could face further strain from a significant options expiry event.
Approximately $10 billion worth of Bitcoin options are set to expire on the Deribit exchange, the largest crypto derivatives platform, at 4 p.m. Singapore time on Friday. With the majority of these contracts being bullish bets placed during a period of sustained price decline, traders may be forced to adopt more defensive or bearish strategies.
During Wednesday's New York trading session, the price of Bitcoin fell below the $60,000 threshold to $59,023, marking its lowest level since October 2024. By 12:30 p.m. Singapore time on Thursday, it had recovered slightly to around $60,800. Since a sharp sell-off on October 10th, Bitcoin has struggled to find a stable floor, having declined over 50% from its all-time high.
A key technical indicator, the 200-week moving average, has been breached, a development that often signals a prolonged bearish phase.
The options expiring on Deribit represent about 37% of the total open interest across the market.
Data shows a put-to-call ratio of 0.83, indicating a market where bullish bets still numerically outweigh bearish ones. However, the context is crucial.
A large portion of the open call options are now "out of the money," meaning they hold no intrinsic value at current prices. Conversely, put options are concentrated around the $60,000-$65,000 and $70,000-$75,000 price ranges. This positioning suggests that bearish trades have a higher probability of being profitable at expiry.
Adam Haeems, Head of Asset Management at Tesseract Group, commented, "While expiry events can help clear out market positions, they don't inherently dictate the future price direction." He emphasized that the core issue is a market dominated by bullish sentiment now confronting the dual challenges of a quarter-end and typically thinner summer liquidity.
"Low trading volumes combined with a concentrated expiry mean Friday's price action could be excessively skewed by the initial flow of funds, potentially reverting to the mean after dealers complete their hedging activities," Haeems added. Dealer hedging refers to trades made by market makers to manage their exposure to price fluctuations.
Any sharp volatility around the expiry date is likely more reflective of this positional adjustment rather than a fundamental, lasting shift in trend. Haeems noted that a more significant test for the market will come in the first full week of July, after quarterly contracts have been settled and overall leverage in the system has been reduced.
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