The cryptocurrency slump on Thursday was led by the currency of the king of the market. After opening above $37k, Bitcoin was already back in the $35k range at press time. Due to price swings, coins worth $75 million were liquidated in just a 4-hour window during the early hours of the day.
Describing Bitcoin’s ‘lower-lows’ phase
Leaving aside today’s drop, the price of BTC has been creating the lowest lows since Feb 16. In some days he tried not to conform to the said trend but was not successful in doing so. Since around the same time, BTC has also been trading below its 50-day moving average.
At this stage, Bitcoin has some supports in and around its current price range. The $32,700 to $32,900 range managed to help the coin’s price move up the ladder in early January this year and in July last year. Said levels may also provide some relief to BTC this time around. Further down, Bitcoin can also count on the $29k level, which helped it through the same July-August phase.
Beware of upcoming options expiration
The Bitcoin market is set to experience a remarkable options expiration involving 50,000 coins tomorrow. The snapshot attached below [right] shows that the number of buy and sell contracts are more or less equal.
Now, as expected, puts dominate lower prices up to $39,000, while call contracts, after that anger, have an edge. [left part of the snapshot].
However, as bearish sentiment gained more strength today, new traders entering the market mostly only bought puts. As can be seen in the Skew chart below, the sales contracts for 705, 701, 668 and 583 DBT were obtained at strike prices of $35K, $34K, $32K and $30K, respectively on Thursday.
Even in the $36,000 to $38,000 price range, contracts of the same nature of sale only have the hand of the whip.
Therefore, as long as the Bitcoin price continues to hover around its current range, it would be quite difficult for traders to resist exercising their option to sell their respective coins during the expiry period tomorrow. If selling pressure increases, it will not be possible to stop the Bitcoin price from falling freely.