Bitcoin fell by over 6% to below $48,000 during the US trading day on Tuesday, in spite of continuous muted spot market activities. The spot trading volume of Bitcoin is barely changed from the previous day, but the change in price is a result of the market going into the monthly options expiration.
Around 129,800 option contracts with a value of over $6 billion are about to expire this Friday. In general, Bitcoin will move toward the “max pain” point in the lead-up to the date of an expiration and experiences a good directional move in during the days following the settlement.
Credit: Skew
This leads to the creation of maximum losses (the max pain) for option buyers.
In the case of the max point for the option expiration this Friday, the number sits at $48,000.