Key takeaways:
- Bears gained a major edge ahead of Friday’s $9 billion options expiry, especially if Bitcoin price stays below $74,000.
- Spot Bitcoin ETF outflows and corporate BTC balance reductions fueled market pessimism.
Bitcoin (BTC) retested the $72,500 level for the first time in six weeks on Thursday, triggering $342 million in liquidations for bullish leveraged positions. Despite a subsequent relief bounce to $73,500, traders are worried that bears will keep control due to the upcoming $9 billion monthly options expiry.
May 29 Bitcoin call (buy) options open interest at Deribit, BTC. Source: Deribit
Deribit holds a 70% market share for the May monthly options expiry, capturing $3.4 billion in open interest for calls (buy) and $2.91 billion for puts (sell). However, bulls were caught off guard when Bitcoin broke below $78,000 on May 17.
If Bitcoin stays below $74,000 heading into Friday’s expiry, only $306 million worth of call options will remain in the money. In contrast, put options targeting $74,000 or higher total $1.05 billion, giving bearish strategies a massive advantage.
May 29 Bitcoin put (sell) options open interest at Deribit, BTC. Source: Deribit
Even if Bitcoin reclaims $74,000 by Friday, put options will still outpace call instruments by $265 million. On the bright side, there is no excessive demand for downside protection right now, as put options volume typically spikes only when traders anticipate severe negative surprises.
Bitcoin options put-to-call volume ratio, USD. Source: Laevitas
The Bitcoin options put-to-call volume ratio stood at 0.8 on Thursday, reflecting $1.57 billion traded in calls versus $1.29 billion in puts. This neutral setup represents an improvement from the prior week, which was marked by heavy demand for defensive, neutral-to-bearish options strategies.
Bitcoin only has an 18% chance of reaching $80,000 by June 26
The June 26 expiry shows traders are generally uninspired by Bitcoin’s short-term price prospects.
Deribit June 26 Bitcoin options pricing. Source: Deribit
The $80,000 June call option traded at 0.0103 BTC on Thursday, equivalent to $757. Given the 28 days remaining until expiry, the implied odds of Bitcoin trading above that level sit at 18%. This widespread pessimism can be partly attributed to the $1.07 billion in net outflows from US-listed spot Bitcoin ETFs over two days.
Related: Bitcoin falls further as BTC miners pivot to AI, pro-crypto legislation stalls
On Thursday, Paris-based semiconductor developer Sequans Communications (SQNS) announced plans to fully liquidate its Bitcoin holdings, abandoning its previous accumulation strategy. Publicly traded mining firms, as well as Trump Media and Technology Group (DJT), have also recently scaled back their Bitcoin exposure.
While it is impossible to predict whether a correction to $70,000 is the most probable scenario based solely on Bitcoin options flows and positioning, bears clearly hold the upper hand heading into the upcoming Friday expiry at 8:00 am UTC. Lingering fear and market uncertainty should prevail, significantly weakening the odds of any sustained bullish momentum in the short term.