Bitcoin is trading at $88,200 following its retest of the $90,000 resistance. While it trades slightly above its opening price, it remains rangebound.
The asset attempted a similar move at the barrier on Monday but faced rejection. The trial marked the third brief breakout in the last 14 days. However, like the previous two retests, the coin dropped below its opening price afterward.
On Tuesday, BTC peaked at $89,310 before seeing slight corrections. The 4-hour chart shows that it declined below $88,000 but rebounded. It has since held on to $88,200.
The coin may end the day at the current price, as it is essential that the bulls defend the $88k support.
Bitcoin Options Expiry
The importance of the $88k is tied to the upcoming options expiry. On Dec 31, options worth over $172 million will expire.
Of the total 1,953, the bulls are edging as there are 1,104 call buyers. However, the max pain price is $88k. Traditionally, when options expiry nears, the asset moves closer to the max pain price as market makers seek to render most positions worthless.
A look at the 1-day chart indicates that Tuesdays are almost always bearish. The coin broke the trend this week, as prices moved slightly higher. The bulls must keep BTC above $88k to end the contract with profit. This explains why Bitcoin has held on to the key level.
Nonetheless, there are indications that the apex coin may surge higher before the expiration. The calls exceed the puts by almost 100% in terms of volume. When trading options, the farther the price is from the max pain level, the greater the profit for traders.
In this case, if BTC ends the current option period at $89k, the bulls gain more. With the recent attempt to retest $90k halting at $89,300, the buyers may stage a rally in the coming hour to ensure the expiration above the day’s peak.
Nonetheless, options delta is currently negative. When this metric is negative, the market makers will hedge by buying spot and going long. Such action added further protection at $88k. A closer look at the Greek table indicates that delta was positive when BTC was at $89k, and MM shorted in response, explaining the earlier corrections at the mark.
However, a close at $88k with a negative delta may be bad for the apex coin. Once the contracts expire, the market makers will remove their hedges. Prices may free-fall in response.
Recovery at $86k
In the event the option termination occurs at the current price and prices react adversely, Bitcoin could plummet below $86k.
The 4-hour chart presents some factors that support this prediction. One such is the bollinger band, which hints at further decline. BTC recently attempted to break out from the bands but retraced. Since its failed attempt, it may retrace further, dropping below the lower band.
Following the Dec 31 options termination, there’s another the next day. However, it’s only half the size of the 31st, and prices may not be significantly affected.
Nonetheless, if the MM resumes hedging the coin, the apex coin may continue trading above $88k, possibly ending 2025 above the mark.
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