Author: Marcel Pechman
Compiled by: Deep Tide TechFlow
Deep Tide Guide: This Friday marks the expiration of March's monthly Bitcoin options, with a scale of $18.6 billion.
92% of call options may expire worthless below $71,000, while signs of economic cracks, such as redemption restrictions in the U.S. private credit market, are providing ammunition for bears.
Bulls need a 6% rally to reverse the situation, with only two days left.
Full Text Below:
Bitcoin's price has been compressed within a narrow range of $67,700 to $71,600 over the past week, moving in high correlation with the U.S. stock market's reaction to the U.S.-Israel-Iran war. Traders are pinning their expectations on the $18.6 billion Bitcoin monthly options expiring this Friday, hoping it will provide bullish momentum to break through $75,000.
Chart: S&P 500 Index Futures (left) vs. Bitcoin/USD (right)
Source: TradingView
March Bitcoin call options dominate the total open interest, with a size of $11.2 billion, while put options are 34% lower at $7.4 billion. But this advantage is largely meaningless—Bitcoin has failed to hold above $74,000 for the past seven weeks. WTI oil prices continue to hold above $90, raising investor worries about persistent inflationary pressures.
Economic Uncertainty Helps Bears Dominate Quarterly Options Expiration
Initial signals of cracks in the U.S. economy have emerged: private credit funds are restricting redemptions due to concerns about deteriorating loan quality. According to CNBC, this $3 trillion industry has recently come under scrutiny, with asset management firms Ares Management, Apollo Global Management, Blue Owl Capital, and Cliffwater forced to suspend or limit withdrawals.
This socio-economic uncertainty may be just what bears need for the Bitcoin quarterly expiration. Analysts are assessing the forces that could drive Bitcoin prices around 8:00 UTC on Friday by examining the strike prices of call and put options.
Deribit holds an absolute leading position with a 76% market share and open interest of $14.1 billion; OKX ranks second with 7.1%, and CME is third with 6.6%. Despite greater demand for call options, Bitcoin bulls on Deribit have been overly aggressive, with most bets concentrated at $90,000 and above.
Chart: Deribit March 27 Bitcoin Call Option (USD-denominated) Open Interest
Source: Deribit
Call options positioned below $78,000 on Deribit amount to only $2 billion, meaning 77% of call options may expire worthless on Friday. If the price expires at $71,000, 92% of call option open interest will expire worthless—clearly, bulls did not anticipate this outcome.
Some of these positions may have been established in February when Bitcoin was still trading above $86,000, which is why a large amount of open interest is concentrated well above the current price.
Chart: Deribit March 27 Bitcoin Put Option (USD-denominated) Open Interest
Source: Deribit
Put options with strike prices of $66,000 and above on Deribit have an open interest of $2.2 billion, meaning 40% of put options will still have value at expiration on Friday. Thus, put options have a slight advantage at the preliminary level, but more granular analysis is needed to understand the impact of price movements on the outcome.
Below are four possible outcomes for Deribit's Friday BTC options expiration based on current price movements:
- Between $65,000 and $69,000: Put (sell) options net advantage of $1.8 billion
- Between $69,001 and $72,000: Put (sell) options net advantage of $950 million
- Between $72,001 and $75,000: Put (sell) options net advantage of $430 million
- Between $75,001 and $78,000: Call (buy) options net advantage of $790 million
Summary: Bitcoin bulls need a 6% rally from the current $70,900 price to reverse the outcome of the March options expiration.
