Impending $780M BTC Options: Will Bitcoin Price React?

Most cryptocurrencies have derivatives which are tied to their values. As such, the quantity of derivatives on the market may influence the direction of price movements of the underlying assets like ETH or Bitcoin. The opening or closing of derivative positions may also impact the prices of the underlying cryptocurrencies. In this guide we discuss the potential effects of the expiry of Bitcoin options on 19 May 2023.

$780 million to Expire on 19 May

29,000 Bitcoin options worth $780m were set to expire on 19 May 2023, creating uncertainty in the market as that may lead to possible changes in BTC price. By the way, recently many derivative traders shifted from ETH to BTC. According to GreeksLive, the BTC options that were set to expire on 19 may had a pain point of $27,500.

As a point, Bitcoin Options are derivatives contracts that enable traders to speculate on the value of BTC without holding it. Primarily, the BTC options allow traders to sell or buy Bitcoin contracts at a predetermined price, the strike price, at a given expiry date.

The max pain value, referred above, is the price at which most losses occur when the contract expires. Therefore, in this case $27,500 is an important point of reference. Accordingly, data on Deribit shows that there is a total open interest amounting to 308,044. More significantly, Bitcoin options are better than Bitcoin futures. This is because the futures have fixed expiry dates.

A similar situation exists in the Ethereum derivatives market where there are 169,000 ETH options which are yet to expire. Comparably, the ETH options are more neutral than those of BTC as they have a put/call ratio of 0.96.

The expiry of the BTC options is likely to cause the price of bitcoin to fluctuate below $26,000. This follows the loss of BTC momentum on 15 May when its price dropped below the $27,500 resistance level. The news of impending regulatory pressure on cryptocurrencies is likely to have resulted in this downward BTC price spiral.

For instance, the news emanating from the Securities and Exchange Committee’s (SEC) that most cryptocurrencies are securities is likely to have dampened the market’s enthusiasm. As anticipated, all the cryptocurrencies that are classified as securities will come under strong oversight from the SEC, which will stifle their market growth. In addition, SEC Chairman Gary Gensler has expressed the view that network nodes violate the US securities laws which creates further uncertainty in the market.

Developments in the United Kingdom also show that the government wants to increase its control on cryptocurrencies. For example, on 17 May the United Kingdom’s Treasury Committee recommended that crypto investment activities like BTC trading be treated like gambling based on the “principle of same risk, same regulatory outcome.”

The reason for this position is that most cryptocurrencies like Bitcoin and ETH have nothing that backs them. Therefore, the current uncertainty in the market explains the recent move by some Bitcoin traders to reduce their exposure to BTC investments. The bearish sentiment comes after the recent bitcoin revolution that encompassed the introduction of Bitcoin NFTs, Bitcoin Virtual Machine and BRC-20 tokens which were the drivers of upward price movements during the first quarter.

Bulls were optimistic about Bitcoin options

Regarding the BTC options earmarked to expire on 19 May, the bulls were highly optimistic. As a result their wagers were concentrated above $28,000. One specific reason for that bullish sentiment was the 7% gain of BTC between 12 and 15 May which tested the $27,500 resistance level.

The put-to-call ratio for the Bitcoin options has been 0.81 showing that it is bullish. This is because a ratio below 1.00 indicates a bullish market since most traders will be willing to buy long contracts rather than short ones. However, since the figure is close to 1.00 it also shows that the market sentiment is neutral to bullish. On the contrary, a ratio above 1.0 shows a bearish market.

The diagram below gives a summary of the expected expiry of BTC options.

Bitcoin price analysis

At the time of writing, 26 May, Bitcoin price is $26,636.76, after gaining 1.26% within the last 24 hours but overall lost 1.02% in the last 7 days. The following graph gives a full picture of Bitcoin’s price performance during May.

As noted, The Graph shows that the price of BTC was hovering below $27,000 but above $26,000 since 11 May. On the other hand, its value has been rising since May 25, giving an indication of a bullish market.

BTC price prediction

Most analysts predict that the price of Bitcoin will rise within the remainder of 2023. For example, Coinpriceforecast estimates that the price of Bitcoin will be around $35,391 by the end of 2023. It also forecasts the BTC price to reach $28,687 in June.

On the other hand, Bitcoinwisdom predicts that the price of BTC will be around $40,769.03 in 2023. It estimates that its price will increase gradually during the remaining months.

Lastly, Changelly gives a greater breakdown of the change in the price of BTC. It predicts that its value may reach $28,115.12 in June, $29,535.63 in July and $30,398.73 in August. It further states that BTC’s upward trend will continue up to September when it is likely to reach $30,439.70.

Nevertheless, Changelly asserts that the value of Bitcoin may decrease to $28,248.92 in October and $24,275.87 in November. It also believes that the BTC price will fluctuate between $21,762.44 and $26,307.76.in December. Check Gate’s BTC price predictions for 2025 to find out more.

Conclusion

29,000 Bitcoin options worth about $780 million were set to expire on 19 May which might affect the price of BTC. The Bitcoin revolution we experienced in the first quarter of 2023 has attracted individuals to invest in Bitcoin. Significantly, BTC’s price predictions point to a bright Bitcoin future as analysts expect its value to rise gradually within the next three to four months.