$84,000 Is Bitcoin's Worst Case, Options Trading Firm CEO Says

Deribit CEO Luuk Strijers has pointed to $84,000 as the “max pain” level for Bitcoin ahead of a significant December options expiry, suggesting the market could be pulled down to this level before finding new equilibrium.

Strijers’ analysis highlights the unique dynamics of the upcoming quarterly expiry, which accounts for 44% of all outstanding Bitcoin options, making it the largest options expiry this year.

"The max pain level is $84,000, which is the typical indication of where to expect this expiry to end up in normal market circumstances," Strijers told Benzinga about the upcoming Dec. 27 expiry.

He explained that max pain levels, derived from the strike price where most open interest resides, often act as a gravitational pull on the market during major expiries.

Bitcoin is currently trading at $93,100 levels, down 2.5% over the last 24 hours. Ether ETH/USD is trading at $3,270, down 1% for the day.

Other major altcoins like Solana SOL/USD, Dogecoin DOGE/USD and Shiba Inu SHIB/USD are trading down 0.2%, 0.5% and 1.5%, respectively, according to data from CoinGecko.

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Market Magnetism And Expiry Dynamics

Strijers noted that the large expiry, with $14 billion of Bitcoin options set to expire, could act as a “magnet,” drawing Bitcoin prices closer to the $84,000 level.

"This large expiry might pull the market down toward $84,000, and after Friday morning, we might see a release moment for the market to rebalance or refine its new destination," he said.

The unusual size of in-the-money options adds to the complexity.

Strijers revealed that $4.3 billion worth of Bitcoin options—approximately 30% of the total—are currently in-the-money, a figure significantly higher than usual.

In the context of options trading, an option is considered in-the-money (ITM) when it has intrinsic value.

For call options, this means the current market price of the underlying asset (in this case, Bitcoin) is higher than the strike price of the option.

Conversely, for put options, it means the market price is below the strike price.

This elevated level of in-the-money options necessitates delta hedging, which could contribute to increased volatility during and after the expiry.

Delta hedging is a strategy where traders adjust positions in the underlying asset to neutralize risk from price changes, often amplifying market volatility during major options expiries.

Bullish Long-Term Sentiment Despite Short-Term Pressure

While Strijers acknowledged the possibility of a temporary correction pulling Bitcoin prices lower, he emphasized the long-term bullish sentiment in the market.

"Market circumstances are rather bullish, and upside potential remains high. The next major expiry in March sees strikes as high as $120,000 or even $150,000," he said, pointing to the significant open interest in higher strike calls.

Strijers also highlighted that the put-call ratio stands at 0.44, indicating a stronger preference for calls, which is generally a bullish indicator.

A put-call ratio of 0.44 means that the volume of put options (bets on price decreases) is significantly lower than the volume of call options (bets on price increases). This indicates a bullish market sentiment, as more traders are speculating on Bitcoin's price rising rather than falling.

Despite the short-term pullback, Strijers said, "The market is not bearish at all. It's still positioned in a positive way."

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