Bitcoin Tumbles to $26K as Large BTC Options About to Expire

In a slew of expiring Bitcoin options, Bitcoin on Thursday fell below the $27K mark which again triggered the sell-off. Following a brief hiatus, derivatives traders have returned to Bitcoin options, preferring Ethereum contracts. As a result, 29,000 Bitcoin options will expire this week.

According to GreeksLive, these contracts have a notional value of $780 million and a maximum pain point of $27,500.

Bitcoin options are derivatives contracts that enable traders to speculate on the price of BTC without actually owning the asset. This batch of Bitcoin options has a put/call ratio of 0.81. Deribit also reports a total open interest of 308,044. This is the total number of contracts that have not yet expired.

This large number of Bitcoin option expiration led BTC prices to plunge more than 2% on Thursday leaving the bulls in despair. But not every news is against the price movement. Recently Stablecoin issuer Tether (USDT) to spend up to 15% of net profit on Bitcoin.

Tether to Spend Millions to Diversify Bitcoin-USDT Reserve

Tether International Ltd., the firm behind the third-largest cryptocurrency by market capitalization, will spend 15% of its net investment earnings, or $222 million, on Bitcoin to diversify reserves underpinning its USDT stablecoin.

According to Tether's Q1 2023 Assurance Report, Tether has roughly $1.5 billion in BTC reserves as of the end of March 2023. While many institutional investors keep their Bitcoin in third-party custody, Tether adheres to the principle "Not your keys, not your Bitcoin" and keeps ownership of the private keys linked with all of its Bitcoin holdings.

Tether will use only realised earnings from its investment plan under this new method, disregarding unrealized capital gains earned by price hikes. The company's new policy might possibly support the price of Bitcoin till the end of the year, with Standard Chartered Bank analysts predicting the cryptocurrency would reach $100,000 by the end of 2024.

Bitcoin Price Analysis

Bitcoin (BTC) is now trading at $26,874.16 with a 24-hour trading volume of $11,680,894,144. This indicates a -1.57% decrease in the previous 24 hours and a 0.73% gain in the last seven days. Bitcoin has a market worth of $520,754,952,234, with a circulating supply of 19 million BTC.

The present market attitude indicates that the bears have tightened their hold after breaking through the Fibonacci retracement levels. If BTC goes below $26,430, it may challenge the next level of support at $26,000. On the upside, a break over $27,000 will be required before moving on to $28,000.

According to technical research, BTC is trading below the 200-day moving average and will most likely test support at $26,430. A breach below this level might result in more losses in the following days. 

The Relative Strength Index (RSI) is below 40, suggesting that the market is bearish. The Moving Average Convergence Divergence (MACD) indicates that the downward trend is likely to continue. Bitcoin failed to break through the $28,000 barrier and challenged the $27,000 support level.

Source: TradingView

Conclusion

In conclusion, the expiration of Bitcoin options is certainly driving the Bitcoin price down. The technical indicators, however, are positive and signalling towards a "BUY" market. The overall market sentiment is positive Despite BTC trading below the $27K mark.