Data: $2.2 billion worth of Bitcoin options will expire this Friday

According to Skew Analytics, more than 55,000 bitcoin options contracts worth $2.2 billion are set to expire on Friday.

Data from derivatives exchange Deribit shows that Deribit holds the majority of Bitcoin options contracts. In terms of BTC options, exchanges such as LedgerX, Okex, and CME are following Deribit’s footsteps in terms of open interest.

Deribit has 48,469 BTC options contracts (worth $1.95 billion) and 307,558 ETH options (worth $877 million) expiring tomorrow.

In the two weeks to May 23, open interest across all expiries almost halved to $6.5 billion.

Settlements of monthly options contracts have become increasingly important this year, with the “pain point” — the strike price at which most open options contracts expire — acting as a suspense just before expiration (the last Friday of the month).

For example, Bitcoin fell from nearly $60,000 to $50,000 in the six days before its March 26 expiration, narrowing the gap between spot price and the then-pain point of $40,000. Bitcoin rebounded $4,000 to $54,000, reaching the pain point before its April expiration.

The pain point will attract the spot price near expiration. This is because option sellers, mainly institutions, sometimes try to push the price to the pain point to cause the maximum loss to the option buyer.

The pain point for Bitcoin options expiring on Friday is $50,000 — more than 25% above the current price of $39,000. As Laevitas, a Switzerland-based options analytics platform, wrote on Twitter, some investors are betting that the pain point effect will kick in before settlement, pushing prices to $50,000.

The upcoming settlements are relatively small compared to previous bitcoin options expirations. A record $6 billion worth of contracts expired in late March, while exchanges settled more than $4 billion in options early on April 30.

Therefore, the worst-case scenario effect may not have much impact on the market until Friday’s settlement. However, other factors, such as renewed outflows from crypto exchanges, may help the battered cryptocurrency prices recover.