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Bitcoin (BTC) investors are preparing for the record-breaking $16.5 billion monthly options expiry on March 28. However, the actual market impact is expected to be more limited, as BTC's drop below $90,000 caught investors off guard and invalidated many bullish positions.
This shift gives Bitcoin bears a crucial opportunity to escape a potential $3 billion loss, a factor that could significantly influence market dynamics in the coming weeks.
Bitcoin options open interest for March 28, USD. Source: Laevitas.ch
Currently, the total open interest for call (buy) options stands at $10.5 billion, while put (sell) options lag at $6 billion. However, $7.6 billion of these calls are set at $92,000 or higher, meaning Bitcoin would need a 6.4% gain from its current price to make them viable by the March 28 expiry. As a result, the advantage for bullish bets has significantly weakened.
Bitcoin bulls pray for a “decoupling” if QE restarts
Some analysts attribute Bitcoin’s weak performance to the ongoing global tariff war and US government spending cuts, which increase the risk of an economic recession. Traders worry about slower growth, particularly in the artificial intelligence sector, which had driven the S&P 500 to a record high on Feb. 19 before falling 7%.
S&P 500 futures (left) vs. Bitcoin/USD (right). Source: TradingView / Cointelegraph
Meanwhile, Bitcoin bulls remain hopeful for a decoupling from the stock market, despite the 40-day correlation staying above 70% since early March. Their optimism stems from the expansion of the monetary base by central banks and increased Bitcoin adoption by companies such as GameStop (GME), Rumble (RUM), Metaplanet (TYO:3350), and Semler Scientific (SMLR).
As the options expiry date nears, bulls and bears each have a strong incentive to influence Bitcoin’s spot price. However, while bullish investors aim for levels above $92,000, their optimism alone is not enough to ensure BTC surpasses this mark. Deribit leads the options market with a 74% share, followed by the Chicago Mercantile Exchange (CME) at 8.5% and Binance at 8%.
Given the current market dynamics, Bitcoin bulls hold a strategic advantage heading into the monthly options expiry. For instance, if Bitcoin remains at $86,500 by 8:00 am UTC on March 28, only $2 billion worth of put (sell) options will be in play. This situation incentivizes bears to drive Bitcoin below $84,000, which would increase the value of active put options to $2.6 billion.
Related: Would GameStop buying Bitcoin help BTC price hit $200K?
Bitcoin bulls will have the edge if BTC price passes $90,000
Below are five probable scenarios based on current price trends. These outcomes estimate theoretical profits based on open interest imbalances but exclude complex strategies, such as selling put options to gain upside price exposure.
Between $81,000 and $85,000: $2.7 billion in calls (buy) vs. $2.6 billion in puts (sell). The net result favors the call instruments by $100 million.
Between $85,000 and $88,000: $3.3 billion calls vs. $2 billion puts, favoring calls by $1.3 billion.
Between $88,000 and $90,000: $3.4 billion calls vs. $1.8 billion puts. favoring calls by $1.6 billion.
Between $90,000 and $92,000: $4.4 billion calls vs. $1.4 billion puts, favoring calls by $3 billion.
To minimize losses, bears must push Bitcoin below $84,000—a 3% drop—before the March 28 expiry. This move would increase the value of put (sell) options, strengthening their position.
Conversely, bulls can maximize their gains by driving BTC above $90,000, which could create enough momentum to establish a bullish trend for April, especially if inflows into spot Bitcoin exchange-traded funds (ETFs) resume at a strong pace.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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