$15 Billion Options Expiry: What It Means for Bitcoin and Ethereum – Is the Bottom Near?

A significant event passed in the crypto world, yet there was minimal market reaction.

Key Takeaways

On November 28th, a total of $15.4 billion in Bitcoin and Ethereum options expired with minimal market impact.
Bitcoin's Put/Call Ratio was 0.58, while Ethereum's was balanced at 1.0.
Technical analysis shows Bitcoin stayed below its max pain level of $100,000, which might signify underlying strength.
Some analysts, like Arthur Hayes, believe Bitcoin may have found support at $80,000.
The market recently faced its most substantial Open Interest wipeout, indicating a reset in overheated positions.
The current market calm could potentially indicate a bottoming out for Bitcoin.

Bitcoin

On November 28th, approximately 150,000 Bitcoin [BTC] options worth $13.4 billion and 573,000 Ethereum [ETH] options valued at $1.7 billion expired, summing up to a total of $15.4 billion. This represented a notable end-of-month expiry.

What’s particularly intriguing is how concentrated the positions were: BTC’s Put/Call Ratio reached 0.58, indicating a higher number of long positions compared to shorts, with a max pain price around $100,000. Conversely, ETH maintained a balanced put/call ratio of 1.0, with max pain at $3,400.

Bitcoin

Source: Deribit

Despite the magnitude of this expiry, the market exhibited little movement. Bitcoin closed at $90,955, peaking at $93,000 yet remaining below its max pain level. Max pain refers to the price point where option sellers (those taking short positions) would sell BTC to mitigate their losses. Since BTC stayed beneath the $100,000 mark, sellers had little incentive to manipulate prices, leading to a relatively tranquil market. The key question remains: Does this tranquility indicate the underlying strength of Bitcoin?

Is Bitcoin’s Bottom in Sight?

The market continues to ponder whether Bitcoin has truly reached its lowest point.

In this regard, BitMEX founder Arthur Hayes suggested that BTC might have established a floor at $80,000 during the recent sell-off. This perspective stems from expectations that the Federal Reserve (Fed) may soon conclude its Quantitative Tightening efforts.

Simultaneously, CryptoQuant reported that the market recently experienced the largest Open Interest reduction of the cycle, plummeting from around $45 billion to $28 billion, effectively eliminating many over-leveraged positions.

BTC

Source: TradingView (BTC/USDT)

In simpler terms, the market underwent a significant cleanout.

Against this backdrop, the $15 billion expiry of Bitcoin and Ethereum options happened when leverage had already been significantly reduced. This helps clarify why the event resulted in such limited volatility.

Moreover, Bitcoin's retention of around $90,000 in a risk-averse climate, despite the max pain level sitting at $100,000, indicated that sellers did not need to push prices lower, and buyers were still active in defending support levels.

Overall, this resilience might signal an early indication of a potential Bitcoin bottom.

Final Thoughts

The current state of the crypto market raises important questions about Bitcoin's future. The combination of recent options expirations and reduced leverage could shape the upcoming price actions significantly.