On February 24, $1.8 billion worth of Bitcoin options will expire. This may affect the dynamics of the BTC rate in the short term.
How are things in the BTC options market?
Today, February 24, there was a major expiration of $1.8 billion worth of Bitcoin option contracts. This could have a short-term impact on the BTC price as the open interest exceeded 300,000.
How commented popular industry cryptanalyst Colin Wu (@WuBlockchain):
“Today at 16:00 UTC+8 (11:00 Moscow time), $1.8 billion worth of BTC options will expire. The put/call ratio is 0.66, and the main pain point is located at $22,000. BTC reached 309,000. This is almost a record value in the history, it is second only to the figure of November 11 last year. Options on Ethereum are relatively small.”
Options on bitcoin These are contracts that allow traders to buy or sell a certain amount of BTC at a fixed price (the strike price) for a certain period of time on the day the contract expires.
Open interest represents the total number of currently open contracts for various cryptocurrency derivatives such as options and futures.
Put/call ratio (Put/Call Ratio, PCR) is traditionally used as an indicator of investor sentiment. It reflects the ratio of trading volumes for put/call options. The first are options that give the right to sell an asset, and they are used by those who expect the market to fall. Accordingly, call option holders have the right to buy and expect the market to rise.
The ratio of these two groups of traders helps to shed light on the overall alignment of forces and expectations of a fall or rise in the market. A PCR value below 1 indicates that call (buy) volume is higher. Usually, when the indicator starts to move north of the 0.7 area, this can be an indication of a growing bearish sentiment.
As Colin Wu wrote, the current PCR ratio is 0.66. However, according to Deribitthis 24-hour figure reaches 0.81.
How are things with the BTC rate
According to Deribit, the last time a large-scale options expiration (about 135,000 contracts) occurred at the end of December. Then the BTC rate fell by only 1%. However, at that time the market was already in the area of the cyclic bottom. Now, bitcoin has managed to strengthen from the bottom by 45%, so the price drawdown may be more pronounced.
At the time of writing, Bitcoin was trading in the $23,800 region, showing a downward bias that could persist today ahead of option expiration.
BTC bulls are now discouraged, as they did not expect the price to bounce four times from the psychological barrier of $25,000 in a week. The currency has lost all the points scored earlier this week, and the nearest significant support is only around $23,500.
How commented popular crypto trader Ash WSB (@Ashcryptoreal):
“Over the past 8 days, BTC has touched $25,000 five times and tested $23,600 twice. So the current range is $23,300 – $25,300. Strong resistance is in the $25,000 area (as expected), but the $23,300 area is holding up well. despite poor CPI inflation data. Bulls need to close above $25,500.”
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