Crypto analyst Joao Wedson, in his latest assessment of the Bitcoin market, noted that the upcoming option expiration could have a strong short-term impact on the price.
According to Wedson, the options expiry on December 26th is the largest expiry of the year. This expiry, encompassing quarterly and annual contracts, involves a total nominal value of approximately $23.3 billion. The analyst stated that the Maximum Pain level in the options market is $95,000, creating a strong “pull” for the price in the short term.
Wedson noted that despite the low bid/ask ratio, the market is highly leveraged, with short positions concentrated around $95,000 and long positions accumulating below $84,000. He specifically pointed out that a large liquidity pool still exists at the $95,000 level, and that this level coinciding with Deribit’s Maximum Pain Point for options is noteworthy.
Touching upon investor behavior in the short term, Wedson stated that traders have been persistently opening long positions recently. He noted that this strengthens the possibility of Bitcoin’s price first moving towards $95,000 and then experiencing a sharp pullback below $84,000. On the other hand, he added that in an alternative scenario, it’s also possible for the price to first fall to $84,000 and then quickly recover to $95,000.
According to the analyst, whichever scenario unfolds, both bulls and bears are highly likely to be punished again in this process.
*This is not investment advice.
