Sub-$60K monthly close will make Bitcoin’s $3.9B options expiry a non-event

Bitcoin’s (BTC) 2021 performance has been impressive, but traders waiting for a record-breaking monthly candle are likely to be disappointed this week.

After peaking at $64,900 on April 14, a jaw-breaking 27% correction followed, causing BTC price to drop to the $46,000 level.

This downside move obliterated more than $9 billion long BTC futures contracts in a swift action that was previously unthinkable to most investors.

Even though the Bitcoin price recovered $5,800 over the past 48-hours, in the options markets, the bulls were not able to take the bears by surprise as both sides are virtually balanced for April 30 expiry.

Bitcoin (BTC) USD price at Coinbase. Source: TradingView

The total Bitcoin futures open interest just three months earlier was $11 billion, although this record-high took place on April 13 at $27.7 billion. Nevertheless, this shows how meaningful the recent price correction impact was.

Meanwhile, options markets operate on a different basis as the contract buyer pays the premium upfront. Therefore, there is no forceful liquidation risk for the holder. While the call (buy) option provides its buyer upside price protection, the put option does the opposite.

Therefore, those seeking neutral-to-bearish strategies will rely primarily on put options. On the other hand, call options are more commonly used for bullish traders.

Although some exchanges offer weekly options contracts, the monthly ones usually draw larger volumes. April will be no different, with 72,000 BTC option contracts worth $3.9 billion at the current $54,500 price are set to expire.

Aggregate BTC options open interest by expiry. Source: Bybt

Take notice of how dominant April’s options are as opposed to May or September. While the neutral-to-bullish call options dominate with 41% larger open interest for April 30, a more detailed analysis is needed to interpret this data.

It is worth noting that not every option will trade at expiry, as some of those strikes now sound unreasonable,…

Read More