Crypto Options Expiry: Bitcoin Holds Above $40K Ahead of U.S. GDP

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Bitcoin (BTC) is gearing up for a critical moment as crypto options worth $5.82 billion are set to expire tomorrow. The leading cryptocurrency is currently maintaining a position above $40,000 during Thursday’s European trading hours. The expiry event involves BTC options with a notional value of $3.75 billion and ETH options worth $2.07 billion.

Key Focus on Expiry

Friday’s options expiry on Deribit, the world’s largest crypto options exchange, involves BTC options with a notional value of $3.75 billion and ETH options worth $2.07 billion. This accounts for over 85% of the global activity.

As we approach tomorrow’s options expiry, it’s clear the market is steadily recovering from the initial shocks of the ETF introduction and GBTC unwind. Although many traders have been rolling their positions forward from January expiry contracts to February expiry contracts.

As of now, Bitcoin is trading at $39,870, displaying resilience ahead of the U.S. fourth-quarter gross domestic product (GDP) data release and a substantial $5.8 billion crypto options expiry on Deribit. 

However, the dollar index, reflecting the greenback’s value against major fiat currencies, is trading flat at around 103.70.

U.S. GDP Data and Market Sentiment

Traders are closely watching the highly-anticipated U.S. fourth-quarter gross domestic product (GDP) data, scheduled for release at 13:30 UTC. The data is expected to reveal the GDP at a 2% seasonally adjusted annualized pace in the final quarter of 2023, down from 4.9% in Q3.

Market sentiment is shifting as traders reassess the likelihood of early Fed rate cuts in the face of the ongoing inflationary crisis. The Fed funds futures now indicate a 50% chance of a Fed rate cut in March, down from 80% a month ago.

Max Pain Points

The max pain point for Bitcoin’s January expiry options is $41,000, while Ether’s is $2,300. The max pain point represents the level at which options buyers stand to lose the most on expiry. Traditionally, options sellers aim to move the underlying spot market closer to the maximum pain point ahead of expiry to inflict maximum damage on buyers.

The crypto market will be closely monitored as it navigates through the U.S. GDP release and the significant options expiry, impacting both Bitcoin and Ether prices.