Approaching $5B Bitcoin Options Expiry Signals Potential Price Surge at Maximum Pain Level

On Friday at 08:00 UTC, roughly $5 billion in bitcoin (BTC) options contracts will expire on Deribit, contributing to an already tumultuous crypto market.

Bitcoin's extended consolidation phase throughout 2025 led Deribit's volatility index (DVOL) to follow a downward trajectory. However, following bitcoin's recent plunge, DVOL skyrocketed to 52 before dropping back below 50, suggesting a brief period of heightened market uncertainty.

The recent decline in price below $90,000 has left the majority of options out-of-the-money (OTM) and traders facing substantial unrealized losses.

An option grants the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified time frame.

Based on data from Deribit, out of the $5 billion notional value set to expire, $3.9 billion (78%) will expire out-of-the-money (OTM), rendering these contracts worthless upon expiration.

Nearly all calls, which are bullish bets, are OTM due to the significant drop in bitcoin's price over the past few days, resulting in a significant amount of unrealized losses for investors.

Meanwhile, the remaining $1.1 billion (22%) is in-the-money (ITM), with the majority being puts. ITM puts indicate that investors have their strike prices above the spot price, meaning they hold value.

Read More: "Bybit Countersuits Lazarus in $1.4b Controversy"

Nonetheless, the max pain level is at $98,000, which is $10,000 higher than the current spot price. Max pain refers to the price at which option sellers, usually institutions, achieve maximum profit, while buyers experience the greatest amount of losses.

Given that the max pain price is significantly higher than the current spot price, this could motivate options sellers to drive the bitcoin price higher as it approaches the pain level, according to PowerTrade.

"As the end of the month approaches, bitcoin options traders should take note. Max Pain for Feb. 28 is at $98,000, with a massive $5 billion notional value. This means the highest open interest is clustered here, incentivizing market makers to keep bitcoin close to this price. Expect increased volatility and potential price gravitation toward this level," PowerTrade said.

Let's see if the so-called max pain theory holds true.

Read More: "Post-Halving, Bitcoin Miners Relying on Grids Brace for Reckoning, According to MARA"