$10.5B Bitcoin Options Expiration Could Reset Market Expectations

Main Receptors:

Bitcoin bulls need a 9% rally from current levels to take advantage of Friday's $10.5 billion option expiration.

The 90% correlation between Bitcoin and the Nasdaq 100 index shows that tech investor sentiment drives market confidence.

Bitcoin (BTC) price hit an eight-day high on Wednesday, successfully forming a double bottom near the $62,500 level. Despite these recent gains, the price of Bitcoin is 21% lower than it was a month ago, suggesting bulls may not exit ahead of Friday's $10.5 billion monthly BTC options expiration. It remains up in the air if the Bulls can turn the tables and get their momentum back in the last minute.

Derbit is the dominant market leader with a 76% market share, totaling $4.5 billion in call (purchase) options and $3.4 billion in put (sold) instruments. OKX follows in second place with $610 million in calls and $385 million in puts, representing 10% of the total. CME rounded out the top three with $255 million in calls and $287 million in deposits, holding a 5% market share.

Although there is less open interest, the save options are better placed

At first glance, the open interest of cumulative options appears to be 25% lower than that of similar call options. However, neutral-to-bullish strategies were caught off guard by Bitcoin's collapse below $75,000 in early February. If Bitcoin price stays below $70,000 on Friday, 88% of call options on Deribit will be worthless.

Even when throwing out calls targeting $105,000 and above, typically those that are part of complex multi-leg strategies and low buy-in costs, only 37% of the remaining bets were placed below $75,000. In reality, this puts effective call options at around $780 million in open interest on Deribit. Considering these current conditions, it is worth analyzing whether the bear traders are now overplaying their hand.

$1.44 billion in interest on Deribit targets open interest for Bitcoin below $60,000, although bets at $40,000 and $45,000 are unlikely to be effective for those specific levels. Calendar strategies and ratio spreads are associated with higher price targets because they do not require a price crash to achieve profitability.

Put options on Drybit at $72,000 and over $1.15 billion, which is more than enough to offset existing call options. Although Bitcoin's decline to $60,000 is not tied to macroeconomic trends, Nvidia's ( NVDA US ) earnings results should not be underestimated after the US market closes on Wednesday.

The success of the artificial intelligence sector, especially the sustainable operating margins of the world's largest companies, is critical to every risk market. History suggests that bitcoin's correlation with the stock market will not last long, but the fate of Friday's $10.5 billion in options could be determined by the performance of the stock market.

Related: Bitcoin tops $69.5K after stock market rebound, strong earnings data boosts appetite

The 90% correlation between Bitcoin and the Nasdaq 100 index is clear evidence that the tech play is the leader of trader confidence, but as long as Bitcoin's price remains below $75,000, the advantage will continue to hold put options.

Below are three possible outcomes for Friday BTC options ending in Derbit, based on current price trends.

From $ 65,000 to $ 69,000: The net result supports the equipment sold (sold) at 1.15 billion dollars.

From $ 69,001 to $ 71,000: The net result supports the stored (sold) equipment by 845 million dollars.

From $ 71,001 to $ 74,000: The net result supports the stored (sold) equipment by 470 million dollars.

Ultimately, Bitcoin bulls need a 9% rally from the current $68,800 level to turn the tables on February options expiration.