Bitcoin Faces Potential Price Correction as Options Expire on Deribit

Sentiment: Neutral

Bitcoin's imminent options expiry on Deribit sparks speculation of a correction towards $50,000 amidst positive ETF inflows and potential pre-halving retracement.

As the crypto world braces for a significant event, over $9.4 billion worth of Bitcoin options on Deribit exchange are set to expire on March 29th, igniting discussions and predictions among analysts and enthusiasts alike.

According to data, a substantial open interest of more than 134,000 BTC is slated to expire on Deribit, hinting at a potential "max pain" scenario pegged around $50,000. This concept revolves around the strike price where the most outstanding Bitcoin options contracts are concentrated, signifying a point where most option holders would face losses at expiry.

Ki Young Ju, the founder and CEO of CryptoQuant, offers insights into a possible price drop to approximately $51,000, contingent on the slowdown of inflows into spot Bitcoin exchange-traded funds (ETFs). With new whales, predominantly ETF buyers, holding a $56K on-chain cost basis, Ju speculates on corrections typically entailing a maximum drawdown of around 30% in bull markets, with a corresponding max pain of $51K.

After a series of negative inflows last week, spot Bitcoin ETFs witnessed a positive influx exceeding $15 million on March 25th, coinciding with Bitcoin's highest daily close in ten days. The collective net inflow of $418 million into ten Bitcoin ETFs on March 26th underscores renewed investor confidence in the market.

Analyst Rekt Capital delves into historical pre-halving retracements, asserting that the recent price correction aligns with these patterns. With Bitcoin hovering around $70,000 post-retrace, there's anticipation for a potential breakout to new highs if the previous all-time high of $69,000 functions as a supportive level.

Bitfinex analysts suggest that the recent price correction, amounting to an approximate 17.5% dip from Bitcoin's all-time high, indicates a potential local bottom formation or proximity. The pullback from the peak of $73,666 hints at a stabilizing trend, marking a crucial phase in Bitcoin's price trajectory.

While uncertainties loom regarding Bitcoin's immediate price movements, analysts and market participants maintain a cautiously optimistic outlook, with signs pointing towards potential stabilization and renewed bullish momentum.