Bitcoin fell below 46,000 in the early morning! $5.85 billion BTC options will expire on Friday

Bitcoin (BTC) continued to fall after falling below US$50,000 the day before. Following yesterday’s fall below US$48,000, today it further fell below the US$46,000 mark, reaching a minimum of US$45,900. (Currently quoted at US$46,589, a 24-hour drop of 2.4%)

Coinmarketcap data shows that the cryptocurrency market has fallen. Ether (ETH) hit a minimum of 3,649, a drop of 4.42%, while Binance Coin (BNB), Solana (SOL), Cardano (ADA), Ripple (XRP), Terra (Luna), Polkacoin (DOT) There were drops ranging from 4% to 7%.

Huge options contract will expire soon

It is worth noting that Coinglass data shows that on December 31, which is this Friday, a total of up to 126,000 bitcoin-scale option contracts on all exchanges are facing expiration, and the current value is equivalent to 5.85 billion U.S. dollars.

Among them, the total number of call options holdings is 89,829.94 bitcoins, and the total number of put options holdings is 36,176.36 bitcoins.

According to data from the cryptocurrency financial services company Blofin, the maximum pain point price for options expiring on Friday is $48,000, which is the strike price for the highest number of options contracts. Option sellers (mostly institutional traders) will seek to manipulate the spot market and bring the spot price close to the strike price of the highest number of option contracts, which in turn will cause the greatest pain and the greatest loss to the option buyer.

"TheTokenist" reported that there are many call options that expire on December 31 at a strike price of $50,000. If institutional traders manage to keep the price below $50,000, these options will be worthless at expiration; but if Bitcoin reaches or exceeds $50,000 at expiration, these call options will bring profits.

At the same time, there are a large number of call options with a strike price of US$58,000 and US$60,000, and these call options are likely to be worthless, because the probability of Bitcoin rising to this price before the end of the year is very small.

Leverage is at a record high

In addition, in the futures market, the volume of open interest in Bitcoin futures increased by US$2.5 billion in the last week alone, mainly driven by traders in the Binance market; even though Glassnode data shows that the current volume of open interest is still far Far less than historical highs, but the rapid increase in leverage will often increase the possibility of potential short or long squeeze in the short term.

The general decline in trading volume usually occurs at the end of the year, but on a 7-day average basis, since the beginning of this year, the futures market has seen a 16% decline in trading volume, while in centralized exchanges, smaller trading volumes and rises The volume of open interest is a favorable combination that will at least increase the possibility of leverage squeeze (leverage squeeze) that will fluctuate in the next few weeks.

At the same time, CryptoQuant data also shows that the estimated Bitcoin leverage ratio of all exchanges is at a record high level, which may lead to a wave of market corrections, through the currency price plummeting, to flush out all excessive leverage.

CryptoQuant warned on the 28th that it was short-term bearish on Bitcoin: "Short-term bearish! Data on the chain: very high leverage, Bitcoin stablecoin supply ratio (SSR) has stabilized, and Bitcoin options are about to expire. Huobi, Major exchanges such as Binance will cut off contact with Chinese investors before the end of this year, and the biggest bad news from China will also end. The reason for the bearish Bitcoin is still related to the new COVID virus and the federal funds rate. Of course, All these assumptions were made before Bitcoin reached the bubble price."