High Bitcoin options volumes indicate there is still significant interest and capital present in crypto derivatives markets, according to derivatives exchange Deribit, but risk is now being carefully managed, which could explain Bitcoin’s recent price movements.
Bitcoin trading near $90,000 right now “looks a lot clearer when you view it through positioning rather than just price,” said the Coinbase-owned derivatives exchange on Wednesday.
Bitcoin (BTC) appears to be stuck due to concentrated options open interest (OI) around current strike prices for the large Jan. 30 expiry, it added.
This means a “significant share of market exposure is structured through options rather than outright leveraged futures,” they stated.
“Traders are involved, but they’re using hedges and structured trades, not just directional leverage.”
Bitcoin has been trading in a range-bound channel since mid-November, finding support around $85,000 and resistance around $95,000, and oscillating between the two levels.
Capital is present, but risk is managed
Deribit explained that high options volume in near-term expiries, particularly puts (shorts), suggests that traders are managing risk, making price movements more sensitive to hedging flows than external news.
“Rallies may meet supply from risk reduction, dips can find buyers adjusting exposure, and momentum often has to work harder to expand,” they stated.
“So the thing here isn’t a lack of interest. Capital is present. Risk is just being expressed with tighter control, and short-term price behavior is being shaped as much by positioning mechanics as by new headlines.”
Total Bitcoin options OI, or the notional value of contracts yet to expire or be closed, is currently around $38.7 billion and has been rising steadily this month, according to CoinGlass.
Large month-end Bitcoin options expiry looming
The coming Friday will see an end-of-month Bitcoin options expiry worth around $8.4 billion in notional value, according to Deribit.
The put/call ratio is 0.54, meaning there are almost twice as many long contracts expiring as shorts. Max pain, the level at which most contracts will expire at a loss, is currently $90,000, and OI is most concentrated around the $100,000 strike price.
