Will Bitcoin’s $12B Options expiry impact September’s price action?

Key Takeaways

BTC traders were cautious ahead of Friday’s Options expiry and macro data. But QCP Capital maintained a bullish stance in the near-term. 

Traders appeared cautious ahead of nearly $12 billion worth of Bitcoin [BTC] Options set to expire on the 29th of August. 

In its latest market update, Options trading platform Deribit noted that positioning was “put-heavy” near $110K-$115K, suggesting that players were actively hedging against any extra downside risk. 

“BTC expiry points to persistent demand for downside protection, while ETH looks more neutral. Combined with Powell’s Jackson Hole signal, this expiry may help set the market tone for September.”

Source: Deribit

At press time, the Put/Call ratio stood at 0.88 – below 1, suggesting that despite the short-term caution, the calls (bullish bets) were still somewhat dominant.

Notably, the Max Pain level, where most Options expire worthless and benefit sellers, sat at $116K. In some cases, the level acted as a price magnet.

Will bulls defend $110K?

Below $110K, players hedged against a move to $106K and $108K.

And by the 26th of August, BTC briefly touched $108.6K intraday, confirming traders’ hedges in play.

Interestingly, the $108K was hit a few hours later on the 26th August after a major whale dumped his BTC holdings for Ethereum [ETH]. 

Source: BTC/USDT, TradingView

Will the pullback stretch below $108K to $106K or even $100K?

Per Glassnode, such a move would dent the bullish market structure in the near term. The analytics firm noted that $110.8K was the Average Cost Basis for holders who scooped the asset in May-July (1-3 month old holders). 

Historically, the level has acted as a crucial support, but when flipped to resistance, it could signal an extended weakness in the near term, added Glassnode. 

In fact, during Q1 weakness, BTC fell below this cohort’s cost basis, and price stayed it until late April. 

Source: Glassnode

In other words, $110K was a crucial technical and on-chain support ahead of Friday’s Option expiry. 

Macro test ahead

The market may face increased volatility this week, driven by key macro data releases. 

Unemployment claims are due on the 28th of August, followed by Core PCE inflation data on the 29th of August, both of which could significantly influence investor sentiment and price action.

With a likely Fed rate cut in September, indeed, this week could set the pace for end-Q3 price direction. 

For the crypto trading desk, QCP Capital, the near-term was still bullish for BTC despite the bearish sentiment. 

“Near term, BTC appears to be ceding momentum to ETH, but our structural view on BTC is unchanged. As in July, when the market absorbed roughly 80,000 BTC of legacy supply, we expect institutions to buy dips selectively.”