Bitcoin’s $13B Options Expire May Push Price To New Lows

Key takeaways:

• Puts (sell) options dominate the June 26 expiry with net advantages of $1B to $3.4B, leaving bulls exposed.
• Despite Strategy buying BTC again, heavy call (buy) positioning above $72,000 will likely reinforce bearish momentum.

$13 billion in Bitcoin (BTC) options open interest is set to expire on June 26, potentially giving bears fresh ammunition for more downside pressure on BTC price. Bitcoin’s 14% price drop in June so far has caught bulls flat-footed, since most call (buy) options were stacked at $68,000 or higher. Will this monthly expiry open the door for a July recovery?

Deribit options dominate the scene with $10.4 billion in open interest, representing a 79% market share. OKX sits in second at 6%, followed by Binance and CME at 5% each, and Bybit with 4%. It’s worth digging into how Deribit traders are positioned ahead of the monthly expiry.

Bitcoin June 26 options open interest at Deribit, BTC. Source: Deribit

Total call options open interest at Deribit hit $6 billion, but 78% of that sits at $72,000 or higher. With less than a week to go, the effective open interest will likely shrink fast. In contrast, out of the $4.5 billion in put (sell) options open interest, only 28% hinge on Bitcoin falling to $57,000 or below. This setup makes matters significantly worse for bulls overall.

Bitcoin bulls made the wrong call on Strategy and US regulation

Some of the bulls’ over-the-top optimism traces back to Strategy’s (MSTR US) aggressive BTC buying spree in April and May. The firm added 62,841 BTC in just four weeks, helping push prices above $73,000 in May. But sentiment soured as US-listed spot Bitcoin ETFs saw outflows kick off in mid-May.

US-listed spot Bitcoin ETFs weekly net flows, USD. Source: SoSoValue

Hopes for quick passage of the Digital Asset PARITY Act in the United States also faded. The bill would have spared mining and staking rewards from taxes until sold. The market took another hit from Strategy’s sale of 32 BTC and the resulting ETF outflows, even as excitement around tech stocks grew after Google (GOOG US) and Nvidia’s (NVDA US) cash raises.

Related: Bitcoin decouples from tech stocks–Is $60K BTC’s next stop?

Bulls still have time to cut losses, but puts clearly hold the stronger hand right now. Here are four likely scenarios for Friday’s BTC options expiry at Deribit based on current price trends:

• Between $57,000 and $61,000: The net result favors the put (sell) instruments by $3.4 billion.
• Between $61,001 and $65,000: The net result favors the put (sell) instruments by $2.7 billion.
• Between $65,001 and $69,000: The net result favors the put (sell) instruments by $1.7 billion.
• Between $69,001 and $71,000: The net result favors the put (sell) instruments by $1 billion.

Even a 12% rally from the current $63,000 level won’t flip the June expiry in favor of calls. While this doesn’t lock in bear control for July, the expiry outcome will probably weigh on bullish sentiment heading into the new month.