Deribit, a leading cryptocurrency derivatives exchange, is gearing up for one of its largest expiries in history as over $9.5 billion worth of bitcoin options open interest is set to expire this week. This Friday’s end-of-month expiry marks a significant milestone for the exchange, representing approximately 40% of the total open interest.
Analysts at Deribit highlighted the magnitude of this event, noting that the current open interest for March’s end-of-month expiry has reached a peak of $8.61 billion in U.S. dollar value. Comparatively, previous end-of-month expiries for January and February stood at significantly lower figures of $3.74 billion and $3.72 billion, respectively.
At the current spot price level of around $70,000, approximately $3.9 billion worth of bitcoin options are expected to expire in-the-money, with a “max pain” price of $50,000. This suggests that a substantial portion of the options contracts could yield profits if exercised before or on Friday, underscoring the value of these contracts amidst bitcoin’s recent price rally.
The analysts at Deribit anticipate increased buying activity as option holders exercise their contracts, potentially exerting upward pressure on the price of bitcoin or contributing to heightened market volatility as traders adjust their positions. They noted that these higher levels of in-the-money expiries are indicative of the recent price rally and may lead to a removal of the lower max pain magnet.