$6 billion in bitcoin options are expiring Friday – how this pushes the market down

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$6 billion in bitcoin options are expiring Friday – how this pushes the market down

So a very quick overview. An option is just that, an option to buy something at a specific price on or before a certain date.

So for example you might pay 2% (random number) premium on an options contract to buy BTC at 60000 That's your strike price. That premium goes to the option seller. Option sellers are market makers and massive liquidity holders, the big boys of the crypto world.

If BTC is 65000 when the option is exercised you get to buy that BTC at 60000. That's called ITM – in the money. That's a good deal for the option buyer. It's a bad deal for the seller. They have to sell it to you at 60000. Then you're probably gonna be a jerk and sell it at 65000 and push the price down more!

Eff that say the options sellers. They're sitting on billions in cash and cryptos. If the BTC price is 52000 when your option expires then baby you're out of the money. Your option just expires worthless. The option seller gets to pocket your premium. That's free money.

Crypto markets are unregulated and very easy to manipulate. The lower the price is on Friday the more options expire worthless the more money they make.

So this is obviously a pretty huge downward pressure on the market. There's lots of buyers right now so they're happy to sell to them right now to push prices down, and buy back at the bottom.

That means after Friday a lot of this downward pressure will be alleviated. If BTC price manages to withstand this pressure and doesn't drop too far it's actually a bullish sign. It means it's survived an attack and is now unrestrained. There's a chance the bears take control too, and the price can go down. People tend to panic when prices move.

TL:Dr one negative of unregulated markets filled with big money and options and derivatives is that they can push the price around. After Friday they have far more incentive to let the price do whatever. Try not to panic.

submitted by /u/Kaiisim
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