Despite Bitcoin changing hands last Wednesday at a value of $56,500 with most traders handicapped at a plunge of $44,000- especially with the $6 billion in options which will expire on Friday. This price drop is going to put immense pain- especially on the buyers of major options contracts. This makes it even more profitable for option sellers. Although there is a risk involved in such a process, the profits more than make-up for it.
Bitcoin And Its Expiry Might Put The Market In A Twist
This is also called the max pain theory which implies that the cryptocurrency market is always going to gravitate towards the pain point- while it is moving into an expiry zone. This move occurs because sellers have fallen into the habit of pushing the price towards the maximum pain point. They do this by often purchasing or selling any asset- either on futures, or spot markets.
The trick here is that if Bitcoin somehow ends up without any big correction on Friday, they will be rid of major overhangs. Luuk Strijers, the CCO of Deribit stated that the max pain would be $44,000 for the expiry on the 26th of March. But he has been careful in mentioning that this in no way implies that the markets will be gravitating towards the mark on the weekends. Nonetheless, it implies that the pressure on the potential downward would be non-existent post-Friday.
Pankaj Balani, the CEO and co-founder for Delta Exchange, has stated that the trade unwinding on the expiry on Friday might just add some volatility to Bitcoin and the entire cryptocurrency market. Cash, or carry trading has always been a strategy of market-neutrality that has always garnered towards profit-making using the factors of decreasing or increasing prices.
