Traders brace for Bitcoin ‘fireworks’ as $4b in options set to expire

More traders are betting that Bitcoin’s price will fall after a surge that saw the cryptocurrency reach highs not seen since last year’s collapse of FTX that rocked the industry.

Data for the Bitcoin options expiring on March 31 shows bearish bets, or puts, increasing. In the leadup to the expiry, the ratio between puts and bullish bets, or calls, has edged higher. That means that relatively more traders are bearish than bullish.

“That said, there seems to be a movement” in the ratio since, said Darius Tabatabai, co-founder of decentralised exchange Vertex Protocol. That reflects that bulls are showing more interest in piling in, Tabatabai, who was formerly an investment bank metals trader, told DL News.

“We would expect some fireworks” in options if the price were to surpass $29,500 before the expiry, he said. Bitcoin has jumped more than 20% in March. Yesterday, the top cryptocurrency reached $29,000, the highest this year. It has fallen since, and currently trades at about $28,400.

Options contracts often clump up on the last Friday of the month and March is no exception, with over $4 billion worth of contracts set to expire.

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Currently, Bitcoin call options that pay off when the price reaches $30,000 are the most traded, with 8,799 contracts in circulation. However, Bitcoin’s $21,000 calls will pay out the most, with $25.6 million due to traders with those options on expiry day.

Downside bets are more even – with a fairly equal distribution between the $19,000 and $25,000 strikes.

On March 19, Bitcoin breached the $28,000 level for the first time since June. The most valuable cryptocurrency has benefitted from distress in global banking infrastructure. The troubles started on March 10 with the collapse of Silicon Valley Bank.

While some have argued that Bitcoin’s rise is because traders see it as a haven asset in times of strife, some macroeconomists counter that a SVB bailout from the US government promises a flood of dollar liquidity in the market, making riskier assets such as Bitcoin more attractive.

Elsewhere, entrepreneur and former Coinbase CTO Balaji Srinivasan’s March 17 bet that Bitcoin will reach $1 million within 90 days has also helped reignite interest in the cryptocurrency across social media.

Ekin Genç contributed to reporting.