“A red sun rises. Blood has been spilled this night.”
These iconic lines from J.R.R Tolkien’s ‘The Lord of the Rings’ could very well apply to the state of the crypto market on 27 May, as Bitcoin crashed below the $29,000 support level. At the time of writing, the king coin was trading at $28,806.53 after falling by 2.94% in the last day and further sliding by 4.45% in the past week.
While bulls hate seeing price falls on most days, the pain was a little higher today, as thousands of Bitcoin options are set to expire.
Not all who invest are bulls
At press time, Coin Options Track revealed that there were approximately 3,054 puts and 1,377 calls set to expire today. While 3 June will see more than 5,000 puts expiring, 27 May is still a red-letter day of sorts. Why? Well, there’s the fact that the maximum pain price of $34,000 is relatively far off from Bitcoin’s press time price.
High call open interest can sometimes serve as a resistance level. In this case, we can see that Bitcoin would have to cross high call volumes at $30,000 and $32,000 before even dreaming of reaching the maximum pain price of $34,000.
That’s why this discrepancy is so surprising. On the other hand, levels seeing a lot of high put open interest included $30,000, $25,000, and even $20,000. As these levels can act as a support, these are important prices to watch as Bitcoin continues to fall in price.
One coin to rule them all
That being said, options are just one part of the bigger picture. An important metric to note is the king coin’s falling exchange outflow volume – meaning that less Bitcoin is leaving the exchanges, or being bought.
? #Bitcoin $BTC Exchange Outflow Volume (7d MA) just reached a 1-month low of $38,635,795.98
View metric:https://t.co/vUIapG1iJt pic.twitter.com/8kbdNIqfl2
— glassnode alerts (@glassnodealerts) May 26, 2022
So is dip buying fever slowing at last? It looks like it. Data from Glassnode further revealed that Bitcoin’s median transaction volume reached a low of around $316, last seen close to two years ago. In essence, this means Bitcoin transactions are involving smaller sums.
? #Bitcoin $BTC Median Transaction Volume (change-adjusted) (7d MA) just reached a 23-month low of $316.39
View metric:https://t.co/k2Un2H1Y3v pic.twitter.com/DqususpL2h
— glassnode alerts (@glassnodealerts) May 26, 2022
Keeping these factors in mind, you might be surprised to learn that TradingView’s Awesome Oscillator [AO] indicator was painting green bars below the zero line. This shows that in spite of the price movements, there is some bullish pressure working on the asset.
Source: TradingView
Source: https://ambcrypto.com/bitcoin-btc-options-expiry-and-its-anomaly-that-you-should-know-about/