Bitcoin (BTC) struggles to retain a lower support level, recovering again above $85,000. After the recent price drop, the monthly options expiry may bring additional volatility and even a late rally.
Bitcoin (BTC) expects the effect of the monthly options expiry, where contracts with a notional value of $5B will expire on Deribit. After the recent market drawdown, about 78% of contracts are expected to expire worthless.
The February options reflect lowered derivative activity after January’s $7.8B expiry. The slowdown in the options market follows December’s peak result of $17B, including quarterly and yearly options.
The current options expiry event will be the largest ahead of the March 25 monthly and quarterly expiry, accruing $9.75B in notional value so far. February, a traditionally strong month for BTC, may end up with a negative result, with one last chance to attack some of the options positions.
This month’s options expiry has its maximum pain set at $98,000, easily $13,000 above the current BTC levels. In theory, traders could try to push the price upward and cause losses for options holders at that level. The high level of max pain is one of the factors that helped BTC recover from recent lows.
For now, BTC managed to bounce off its lows in the $82,000 range. The asset rose during Asian trading hours, reaching $86,222.23.
Since the Bybit hack, BTC has seen a new spike in long liquidations, peaking at $947M in 24 hours. In the past day, liquidations slowed down to $607M for most major exchanges, still posing a risk for sweeping positions at a lower price.
The liquidations have not swept the position at $80,743, though new dips to the $83,000 range are possible. The next day will show the battle between attempts at longer liquidations and attempts to push the price to maximum pain for the options market.
BTC faces selling pressure, long liquidations
BTC still faces significant selling pressures, such as a mix of spot exchange dumping and long liquidations. Addresses in loss are increasing, though they are still near the lower range at around 12%. During previous drawdowns, the market bottom only came after only 30% to 50% of addresses were in profit.
BTC has posted new price records over the past three months. At the same time, some traders were more bullish than the market warranted. Holders remained relatively strong, but the last market correction led to outflows from whales, retail, and even ETF buyers.
The recent sell-off originates from spot sellers that bought near the recent top. As predicted, certain levels prevented a capitulation event, but a drop under $85,000 accelerated panic-selling.
Based on the BTC heatmap, old whales are no longer shedding their coins this time, while newer buyers with wallets aged under 6 months are the biggest sellers.
The most active sellers were new wallets that bought BTC in the past few days and sold to cut losses. Up to $33M in spot selling originated from those wallets. Wallets that bought the coin three months ago are still accumulating, while older whales keep their balances.
For leveraged trading, BTC continued to see mostly long liquidations. The recent price drop to the $82,000 range coincided with sweeping liquidity from long positions down to that level. For months now, long positions have been swept predominantly, while BTC has not seen a significant short squeeze.
Ethereum options have a weak chance of reverting the price
Along with BTC, Ethereum options valued at $1.24B are expiring on February 28. The max pain price for the options is $3,000, a level that ETH may have a hard time reaching in the next days.
ETH recovered to $2,354.09 after sliding to the $2,200 range. The overall bearish attitude keeps ETH away from rallying despite expectations of a breakout. Historically, ETH has ended February mostly in the green, with the exception of 2018. The current February close with a loss will break a six-year green streak.
For ETH, February is set to end with a 28% net loss, not counting any rallies in the last day. The asset faced unprecedented selling pressure after the Bybit exchange hack, leading to suggestions of deliberate dumping to depress the price and recoup the hack losses.
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