Bitcoin is hovering near the $79,450 mark, showing an impressive weekly gain of 23%, yet the asset is still down 9.2% since the start of the year. We are witnessing a classic bounce within a deep correction, but it is premature to talk about a reversal of the long-term trend — the market needs additional confirmation.
An analysis of options positioning ahead of upcoming expirations reveals an interesting picture. Three key events within a month account for about $18.6 billion in open interest:
- August 28 — 81,666 contracts worth $6.43 billion;
- September 4 — weekly expiration worth $1.55 billion;
- September 25 — quarterly expiration, 134,970 contracts worth $10.62 billion.
The max pain level for the August and September expirations sits at $68,000, and for the quarterly one — at $70,000. However, this entire structure was formed during a period when Bitcoin consolidated in the $62,000–66,000 range for about a month and a half. The price has moved more than 15% away from this corridor in just three sessions, so positioning simply has not had time to readjust. Max pain has turned into an artifact of the past rather than a reliable guide.
The mechanical growth driver is exhausted
When Bitcoin was trading near $64,000, market makers were actively selling calls at strikes of $67,000–75,000. As the price rose, they were forced to buy more of the underlying asset to hedge their obligations. This mechanical buying was the main engine behind the surge on August 19–21, when the market moved from $64,000 to $78,000 over three sessions with volumes three times the August norm.
Now the main work is complete: 68% of calls are deep in the money, and the required hedge volume has already been accumulated. The engine that was driving the price up has shut down. That is why the market has failed to close above $80,000 for the fourth consecutive session.
Insurance below $70,000 has burned out
Formally, the put-to-call ratio for the August expiration looks balanced — 0.83. But 83% of all puts are concentrated at strikes below $70,000, which is 12% below the current price three days before expiration. This is insurance that has already completely lost its value.
A far more interesting picture emerges at the September 4 expiration. The maximum volume is concentrated at the $82,000 strike — about $185 million, or roughly 12% of the entire weekly expiration. The ratio with the $80,000 strike points to a linked options structure rather than a simple bet on upside. Its maximum profit is achieved at $82,000, and above $84,000 the position turns into a loss. This means $82,000 will act as a ceiling until the market breaks through $84,000. Above that level, the logic flips, and the same structure will begin pushing the price higher.
Scenarios until the August 28 expiration
- Base scenario — 55%. Bitcoin stays within the $78,000–81,800 range.
- Upside breakout — 25%. A move above $81,300 with a push into the $81,800–84,500 zone via a short squeeze.
- Break of $78,000 — 20%. A cascade of long liquidations with a move toward $75,000–77,000.
After the expiration, the picture changes qualitatively. Call sellers who were holding Bitcoin down against their sold rights will be freed from their hedges and begin selling them off. This deferred supply amounts to over $1 billion and could exert serious pressure on the market.
My conclusion: the market has entered a phase of high uncertainty where options mechanics temporarily replace fundamental drivers. Traders should prepare for increased volatility after August 28, when the freed-up hedge flow could trigger sharp moves in both directions.
To be continued.