There is an important turning point in the cryptocurrency markets this week. In the Bitcoin market, especially option contracts, which stand out among derivative products, contracts with a value of over 14 billion dollars will expire on Deribit, the largest crypto options platform in the world.
At the end of this maturity, which will take place on Friday at 08:00 UTC, approximately 40 percent of the total open positions will be closed. A contract on the platform directly represents one bitcoin, and this high volume could potentially impact price movements in the market in the short term.
$75,000 Stands Out as the “Max Pain” Point
According to Deribit’s data, this time the prominent level is the $ 75,000 band. This price point, called “Max pain”, indicates the level at which the contract loses the most value and therefore investors suffer losses. This concept, which is frequently used by professional investors, may tend to push the market price to this level as the maturity date approaches.
Deribit’s Commercial Affairs Manager, Jean-David Péquignot, stated in his evaluation on the subject that the price of bitcoin is currently around $ 71,000, and $ 75,000 has become a center of attraction in the options market like a magnet. Péquignot pointed out that “delta-hedge” transactions, which are frequently featured in option markets, can also bring the price closer to the $ 75,000 band in such periods.
“Historically, delta protection transactions implemented by market makers in such periods can bring the price closer to the point where the option will become worthless, that is, the max pain level,” he said.
According to the famous “max pain” theory, institutions and funds with large portfolios are known to adjust their positions in the market to keep the price close to this point in order to limit their payouts on the maturity date. These mechanical transactions can become evident, especially with intense buying and selling before maturity.
Volatility and Institutional Positions Receive Attention
As the maturity date approaches, volatility in the market has decreased. Recently, there has been a decrease of approximately 6 points in the volatility indices for both bitcoin and ether. This shows that sudden and high volatility is not expected in the market.
Péquignot pointed out the contraction in volatility in recent sessions and stated that this indicates that the market expects a calm and controlled ending price.
In addition, as the uncertainty brought by the tensions in Ukraine and the Middle East continues, institutional investors are taking more controlled steps. In particular, the increase in put options being executed at levels above the market price indicates that institutional trends are cautious. These investors aim to earn income from the premiums on their spot positions by writing put options at prices above.
Pointing out that the current put/call ratio in the Bitcoin market is at 0.63, Péquignot emphasized that institutional sales pressure indicates that a ceiling may form on the price. The large maturity period made the $75,000 level stand out as an important psychological and technical reference point.
