For most of the month, traders had plenty of explanations for Bitcoin’s inactivity. They argued that a crowd of options contracts had trapped prices between $60,000 and $65,000, and that dealers were buying on the edge and selling on the rebound to maintain their hedges.
Friday’s expiration would have eliminated about $1.2 billion of that exposure, and the aftermath should have cleared things up. If the options were pinning Bitcoin near $63,000, the price should start moving once the options expire.
And it happened. Bitcoin was trading at about $66,200 on Tuesday, up about 2.9% for the day and about 5% for the week, and close to the $65,700 resistance-turned-support level that hasn’t held throughout this month. This can also be considered proof of correctness. Once the wall of options that weighs down prices is removed, the market will come to life.
But a more accurate view is that the expiry didn’t do the heavy lifting, and the fuel behind this week’s moves was actually coming from somewhere else.
The wall of options has collapsed and demand has come in.
Approximately 19,000 Bitcoin options contracts settled on July 17th, with a notional value of nearly $1.2 billion, a put-call ratio of 0.9, and a maximum pain level of $63,000. Ethereum added 123,000 contracts worth about $230 million, resulting in a much heavier put-call ratio of 1.61, reflecting one-month downside protection demand. In total, approximately $1.43 billion in crypto options was leaked.
However, the conceptual numbers here can be a bit misleading. This $1.2 billion is not $1.2 billion due to buying and selling pressure. It is the face value of the underlying exposure and the actual premium at risk is only a fraction of it. The put-to-call ratio of 0.9 indicated a slightly higher appetite for calls than puts, and the maximum pain level of $63,000 represented the level at which option sellers would pay the least.
Max Payne is a bookkeeping reference that shows where positioning is concentrated and a poor guide to where prices will land. Deribit’s most recent quarterly expiry shows little evidence of consistent fixed effects.
The really important number is how much open interest is removed by expiration, which was quite small by recent standards. A similar July 10 batch liquidated about 7% of outstanding options, but this was just a fraction of monthly and quarterly closings that reset billions of dollars at a time. A maturity of this size will never force a permanent transition.
| metric | Best before date: July 17th | Snapshot of July 21st |
|---|---|---|
| BTC spot | ~$63,000~$64,500 | ~$66,200 |
| ETF flow | Returned to Japan after 8 weeks of withdrawal | 5 consecutive inflow sessions |
| option downside demand | Increased put bias | Decreasing demand for protection |
| whale accumulation | building | +66,700 BTC in 60 days |
| index of fear and greed | cautious | ~29 (“Fear”) |
Demand typically returns after an expiry of this size. The US Spot Bitcoin ETF recorded its fifth consecutive session of inflows and second consecutive week of net positive flows, led by BlackRock’s IBIT, after eight consecutive weeks of billions of dollars being withdrawn from the fund. The pace of recovery accelerated after last week’s decline in semiconductors, as softer U.S. inflation data and a rally in Asian tech stocks restored some risk appetite.
Larger holders have been absorbing supply for weeks under these flows. According to data from CryptoQuant, wallets holding between 1,000 and 10,000 BTC have added approximately 66,700 coins in the past 60 days, the strongest accumulation in this cohort since February.
If these buyers come in while smaller holders are selling, it reduces the available supply and requires less new capital to drive prices up. We see demand materializing before the contract expires on Friday.
If option gamma truly suppressed prices, the recovery we saw this week would have been from spots where capital was suppressed and volume increased. That’s more or less what the data shows. Futures open interest rose to about $32 billion, and volume soared more than 80% on the day, driven by ETF inflows and whale buying.
But the evidence is thin, and markets are less convinced that there will be a long-term economic recovery. The Fear and Greed index is around 29, still in fear territory despite rising prices.
Compared to June’s $4.5 billion in outflows, cumulative ETF inflows in July were about $200 million, only a few percent of outflows. Spot volume is thin and the $2.3 billion stablecoin’s liquidity depletion reduces the amount of dry powder available to defend higher levels, leaving macro tail risks remaining with oil prices above $91 until the Fed’s July 28-29 meeting. A break below $64,000 will bring $62,000 back into the picture.
Either way, the point remains the same. Prior to Friday, option concentration offered a plausible reason for Bitcoin’s narrow range.
Since Friday, this range has broken out, driven by capital flows driven by maturities that are too small to move anything on their own. A more complex explanation is why the price is being tested now: Bitcoin had no buyers until this week.
(Tag translation) Bitcoin
