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Bitcoin Pursues the 200-Day Moving Average as the $2B Options Expiration Approaches

Going into the monthly options expiry, Bitcoin is seeing significant price volatility once again.

According to CoinDesk 20 statistics, the cryptocurrency is now selling at about $47,000, down 4.4 percent on the day. The drop has wiped out Wednesday's 2.7 percent gain, exposing bitcoin to the widely followed 200-day moving average (MA) barrier around $46,040.

“What we're witnessing is normal pre-expiry pricing volatility,” XBTO Group CEO Philippe Bekhazi said. “After monthly settlement, the market usually recovers.”

According to Skew statistics, 42,500 option contracts worth about $2 billion are scheduled to expire on Friday. At 8:00 UTC, the leading crypto options exchange Deribit will settle the bulk of open interest.

Since January, data has shown that bitcoin tends to advance toward the "max pain" threshold in the days leading up to an expiry and then sees a strong directional shift in the days after settlement. According to traditional market theory, option sellers, mostly institutions, manipulate the spot market to push prices closer to the strike price at which the greatest number of open options contracts expire worthless, resulting in maximum losses – or pain – for option buyers while minimizing losses for option sellers.

According to Deribit, the maximum pain point for Friday's monthly expiry is $44,000, indicating that history is repeating itself. In the near term, the options market has also turned bearish, with the one-week put-call skew showing positive values at press time. Short-term puts, or bearish wagers, are attracting more demand than calls at the moment. The one-month skew is neutral, but the three- and six-month skews remain bearish, suggesting a long-term bullish tilt.

A steady influx of BTC into crypto exchanges may cause price instability. The Huobi exchange received 23,256 BTC at 06:08 UTC today, according to data from blockchain analytics company CryptoQuant.

CryptoQuant CEO Ki-Young Ju stated, "It's a real deposit from a user." Users often move bitcoin to exchanges to liquidate their holdings or sell coins to finance derivatives and alternative cryptocurrency trading, causing price volatility.

“Bitcoin reserves are rising across all exchanges recently, which may influence the market in the near term,” Ju added. “These bitcoins may be sold, used as collateral in derivatives, or traded for altcoins. In any case, it raises market volatility.”

Due to the cryptocurrency's inability to maintain gains over $50,000 earlier this week, the immediate technical analysis bias has shifted negative.

In an email, Katie Stockton, founder and managing partner of Fairlead Strategies, stated, “Both bitcoin and ether verified short-term counter-trend ‘sell' signals per the DeMark indicators, which have been quite accurate in the past as predictors of short-term inflections.” “The message is that price movement will remain sideways to downward for another 1-2 weeks.”

Stockton noted that, although intermediate-term momentum is favorable, some risk management may be required in the short term, given the initial support of the 50-day MA around $39,652. Meanwhile, Bekhazi of XBTO cited $46,800 as a major source of assistance.

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