📊 The statistical impact of options expiration on Bitcoin and Ethereum movements
A short study on the expiration of options worth $3.15 billion
(Abstract):
Today, the cryptocurrency market is witnessing the expiration of options contracts for Bitcoin (BTC) and Ethereum (ETH) worth a total of approximately $3.15 billion. This paper aims to analyze the short-term impact of expiration on price movement, relying on concepts of Max Pain Theory, open interest distribution, and the behavior of market makers.
1️⃣ Theoretical background
Options contracts are derivative instruments that indirectly affect the spot market, especially as the expiration date approaches, where market makers rebalance hedging positions (Delta Hedging), leading to:
Reducing sharp trends
Increased momentary volatility
Price tendency to move within a specified price range
Behavioral studies of derivative markets indicate that the days accompanying expiration often exhibit sideways movement unless a strong external catalyst intervenes.
2️⃣ Distribution of current options contracts
Total value: ≈ 3.15 billion dollars
Bitcoin: ≈ 2.6 billion dollars
Ethereum: ≈ 470 million dollars
Main platform: Deribit
Open interest data indicates a significant concentration of BTC contracts near the 88,000 dollar level, which is statistically known as the maximum pain point (Max Pain).
3️⃣ Analytical framework (Methodology)
The analysis is based on:
Max Pain theory
Dynamic Hedging behavior (Dynamic Hedging)
Analysis of liquidity zones (Liquidity Zones)
Comparison of price deviation before and after completion in similar historical events
4️⃣ Statistical expectation of price movement (Short-Term Range Expectation)
🔶 Bitcoin (BTC):
Expected lower range: 86,200 – 86,800 dollars
Expected upper range: 89,200 – 90,000 dollars
🔍 Scientific interpretation:
Probabilistic models indicate that price tends to stay within this range due to a balance of buying and selling forces associated with the closing of options contracts, with the possibility of temporary price tails outside the range without confirming direction.
🔷 Ethereum (ETH):
Expected lower range: 4,600 – 4,650 dollars
Expected upper range: 4,820 – 4,900 dollars
🔍 Scientific interpretation:
Due to the high statistical correlation between ETH and BTC, Ethereum's movement shows a following behavior, with limited volatility within the range until the effect of settlement ends.
5️⃣ Discussion
Expiration does not generate a trend by itself
The market often experiences a contraction in directional momentum
True directional movement tends to appear after completion and not during it
High leverage is more susceptible to liquidation
6️⃣ Conclusion
Statistical data indicates that the market is in a temporary equilibrium phase governed by derivative considerations rather than fundamental factors. Therefore, trading within price ranges with risk adjustment aligns more with the historical behavior of the market under such circumstances.
✍️ : The Arabian Titan
