Crypto market at risk of crash ahead of $28b options expiry

The crypto market retreated suddenly in the American session, erasing the gains made earlier during the day, as investors waited for the biggest options expiry of the year. 

Crypto market braces for $28 billion options expiry

Bitcoin (BTC) price dropped below $87,000, down from the intraday high of $89,000. Similarly, Binance Coin (BNB), Dogecoin (DOGE), and Canton dropped by over 3% in the last 24 hours.

The retreat mirrored activity in the US stock market, where the blue-chip Dow Jones fell 70 basis points. Stocks and the crypto market experienced low trading volume as many traders remained in holiday.

The next major crypto news will come later, as the industry experiences the largest options expiry of the year. Bitcoin options worth over $23 billion and Ethereum options worth over $4 billion will expire on Deribit. 

Bitcoin’s options have a put-call ratio of 0.38, indicating a bullish skew, with calls outnumbering puts. The major bullish concentrations are between $100,000 and $116,000, with the maximum pain point being at $96,000. Maximum pain point is a level where most options expire worthless.

Meanwhile, 1.28 million Ethereum (ETH) options worth over $4 billion will expire on the same time. The put-call ratio is between 0.43 and 0.45, indicating a bullish skew. Its primary strike concentration is between $3,000 and $3,100, with the maximum pain point being at $3,000.

The crypto market often experiences higher volatility before and after major options expirations. This volatility will be amplified by the fact that volume in the cryptocurrency industry remains thin, with more users being in holiday. 

Bitcoin price action points to more cryptocurrency pain

The three-day chart shows that Bitcoin price remains under pressure and has formed numerous bearish patterns that may lead to more downside in the near term.

Bitcoin formed a rising wedge pattern, characterized by two ascending, converging trendlines. The coin has also formed a bearish pennant pattern, consisting of a vertical line and a symmetrical triangle.

It is also about to form a death cross as the spread between the 50-day and 200-day Weighted Moving Averages narrows. Therefore, the coin is at risk of falling, potentially to the November low of $80,000. A move below that level will indicate further downside, potentially to $75,000.