Bitcoin plans 200-day MA support as $ 2 billion options expire

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Bitcoin is once again experiencing moderate price turbulence as the monthly options expiration approaches.

The cryptocurrency is trading near $ 47,000 at the time of publication, which is a 4.4% drop on the day, according to data from CoinDesk 20. The drop reversed the 2.7% gain Wednesday and exposed the widely followed 200-day moving average (MA) line located at $ 46,040.

“What we are seeing is the typical price volatility before expiration,” said Phillipe Bekhazi, CEO of XBTO Group. “[The] the market generally rebounds after monthly settlement.

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A total of 42,500 options contracts worth around $ 2 billion are expected to expire on Friday, according to data provided by Skew. The dominant crypto options exchange Deribit will settle the majority of open interest at 8:00 UTC.

Data since January shows bitcoin tends to move towards the ‘maximum pain’ point before expiration and sees a strong directional move in the days following settlement. In traditional market theory, this behavior results from the fact that option sellers, mainly institutions, manipulate the spot market to bring prices closer to the strike price at which the greatest number of open option contracts expire without value, resulting in maximum losses – or maximum pain – for option buyers. and minimize losses for sellers.

History seems to be repeating itself, as the maximum pain point for Friday’s monthly expiration is $ 44,000, according to Deribit. The options market also turned bearish in the short term, with the one-week buying bias pointing to positive values ​​at the time of publication. This is a sign of short-term put, or bearish bets, attracting higher demand than calls. The one month bias is neutral, while the three and six month bias is always negative, indicating a long term upward bias.

A continued influx of BTC on crypto exchanges could also lead to some price volatility. Data from blockchain analytics firm CryptoQuant shows that the Huobi exchange received 23,256 BTC at 06:08 UTC today.

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“This is an actual deposit from a user,” CryptoQuant CEO Ki-Young Ju told CoinDesk in a Telegram conversation. Users typically transfer bitcoin to exchanges when considering liquidating holdings or selling coins to fund derivatives and alternative cryptocurrency exchanges, resulting in increased price turbulence.

“The supply of bitcoin on all exchanges has been increasing lately, which could affect the market in the short term,” Ju said. “These Bitcoins could be sold, used as collateral for derivative trading, or used for altcoins trading. Either way, this increases market volatility.

From a technical analysis perspective, the immediate bias turned bearish due to the cryptocurrency’s failure to keep gains above $ 50,000 earlier this week.

“Bitcoin and Ether have confirmed short-term countertrend ‘sell’ signals according to DeMARK indicators, which were quite timely in the past as indicators of short-term inflections,” Katie Stockton, Founder and Managing Partner of Fairlead Strategies, said in an email. “The message is for an additional 1 to 2 weeks of sideways down price action.”

Stockton added that while the medium-term momentum remains positive, some risk management may be needed in the very short term, given that the 50-day MA at $ 39,652 is the initial support. Meanwhile, XBTO’s Bekhazi mentioned $ 46,800 as key support.

Also Read: Bitcoin Miners Hang On To Platforms, Bet Bull Run Will Continue

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