KEY POINTS

  • Around $4 billion worth of Bitcoin options are set to expire Friday
  • It's possible that no further volatility will be caused by the expiration
  • As Bitcoin's price stabilized, alternative cryptocurrencies found room to increase

Bitcoin may be trading at $33,000 at the moment but the options market signals a bearish sentiment, suggesting a plunge to $27,000 is still possible.

Around $4 billion worth of Bitcoin options are set to expire Friday, split among calls (bullish) and put (bearish) options. According to Bybt.com, the expiry accounts for 107,000 BTC, which is 45% of the open interest for aggregate options, Cointelegraph reported

Most of the enthusiasm was due to Bitcoin's new all-time high of $42,000. With that, there were some bullish call options that traded. However, as Bitcoin slid down, the bullish short-term options became worthless. Setting aside call options above $40,000 and put options below $25,000, an estimated $745 million worth coins will expire on Friday, Cointelegraph said. 

The 30% to 20% delta skew showed bearish sentiment on Jan. 10, which was when Bitcoin fell by 15%. After that, there was optimism on the options market, which reached a level unseen over the last 12 months. 

Bulls have an advantage on the Friday expiry, but there are still large put options between $33,000 and $35,000. "Bulls seem in total control of Friday's expiry, although incentives between $28,000 to $35,000 are reasonably balanced," Cointelegraph said, noting that no additional volatility would be caused by the expiration.

Bitcoin closed Sunday at $32,259 on Coinbase and appears to form new support at that level after abandoning $35,000. The dominant cryptocurrency has shed almost $10,000 of its value in the last two weeks. Nevertheless, it is still up 15% since the year began and 243% since the last 365 days.

A stabilizing Bitcoin allowed the market to breathe, as alternative cryptocurrencies led by Ethereum have made gains during the weekend. Ethereum, the second-largest cryptocurrency, closed at its highest level of $1,392 Sunday and it was trading above $1,420 at the time of this writing.

How high -- and how low -- can it go? Bitcoin is a rollercoaster and not for the faint of heart investor How high -- and how low -- can it go? Bitcoin is a rollercoaster and not for the faint of heart investor Photo: AFP / INA FASSBENDER