Will Bitcoin price drop below $70K as $2.2B BTC options expiry looms?

Bitcoin price fell to near $70,000 on Friday following a sharp rebound the previous day. A looming BTC options expiry event is now keeping investors on edge as the market anticipates potential volatility.

According to data from crypto.news, Bitcoin (BTC) price fell 4.5% to an intraday low of $70,177 on Friday morning Asian time before stabilizing around $70,400 at press time. The bellwether pulled back after facing rejection around $74,000, a key resistance level it had failed to break for over a month. 

Bitcoin price fell as investors began booking profits after climbing over 15% in the past 5 days. 

This came amid a broader risk-off environment triggered by the ongoing war between the U.S. and Iran, which has led energy prices to soar to multi-month highs. The military escalation has also triggered capital rotation into traditional safe-haven assets, which have seen relatively better performance amid the geopolitical uncertainty. 

Today, investor sentiment is being kept in check as $2.22 billion worth of Bitcoin option expiry is set to be settled on the Deribit exchange at 8:00 a.m. UTC. Over 31,500 Bitcoin open contracts are set to expire.

At press time, the put-to-call ratio was at 1.72, meaning put options or traders betting on Bitcoin to go lower far surpass the calls that are betting on a rise. The maximum pain level for BTC or the price at which most option contracts expire worthless stood at $69,000, just $1,400 short of the current spot price. 

The maximum pain level, also known as the strike price, tends to pull spot prices towards the center around expiry. Therefore, there remains a high risk that Bitcoin price could pull back towards the $69,000 mark as options reach expiry. 

Bitcoin has failed to hold above $70,000 six times since the start of February, and losing this key psychological support once again could spook short-term traders who were betting on the current recovery rally.

Despite the concerns surrounding the massive options expiry today, BTC price charts have not yet shown signs of a breakdown. 

On the Bitcoin/USDT 24-hour chart, momentum indicators still portrayed a positive outlook at least in the short term. 

Notably, the MACD line was pointing upwards, suggesting growing buying pressure for the bulls in comparison to the selling pressure exerted by bears. At the same time, the Relative Strength Index has also formed a bullish divergence with the price action. 

For now, bulls will be eyeing $72,000 as the next major resistance level to claim, a break above which could likely end its downtrend today. 

On the contrary, a move below the $70,000 support could pull BTC price to $69,000 and successively as low as $60,000 as the broader structure remains confined within a bearish flag pattern, which is considered one of the most negative formations in technical analysis.