A big number of Bitcoin options are due to expire, which might have an influence on BTC’s next short-term price movement.
Bitcoin options contracts worth around $1.8 billion are slated to expire today. As Open Interest has surpassed 300,000, this might have an influence on price fluctuations. The entire amount of outstanding derivative contracts that have not been resolved is referred to as open interest (OI).
Bitcoin options are contracts that allow traders to speculate on Bitcoin’s price. They let traders to purchase or sell Bitcoin at a predetermined price, known as the strike price, on a certain date of expiry.
Colin Wu, an industry analyst, reported a put/call ratio of 0.66. Deribit, on the other hand, now has a 24-hour ratio of 0.81, indicating that longs and shorts are more closely matched.
A ratio of 0.7 or greater often indicates that traders are purchasing more puts (shorts) than calls (longs). This shows that gloomy sentiment in the market may be increasing.
Divide the number of traded put options by the number of traded call options to get the put/call ratio.
A put option is a contract that grants the trader the right, but not the responsibility, to sell or short an asset at a preset price and time frame. A call option is similar to a put option in that it offers the buyer the right to buy or long the asset.
Additionally, a put/call ratio of one shows that the number of call buyers is the same as the number of put buyers.
Deribit reports that the most recent large contract expiry occurred in late December when around 135,000 contracts were liquidated. BTC prices had fallen by only 1% at the moment. They were, however, already at the bottom of the market cycle.
The drop might be more severe this time because the asset has risen by 45% from its low.
With Bitcoin prices currently around $23,900, bears are battling to drive prices below this level. Nonetheless, Bitcoin is now declining, having lost 2.4% in the last 24 hours.
As a result, there might be more bearish momentum today when the options expire. Furthermore, the bulls were not anticipating four $25,000 rejections in the last week.
BTC has already recouped all of its recent gains, and there is minimal support below current levels, which are approximately $23,500.