Bitcoin Stays Far Below $72,000 Max Pain Ahead of $10 Billion Options Expiry

Bitcoin is trading far below its max pain level ahead of a major options expiry, raising doubts that the so-called max pain theory will play out this time.

CoinDesk reported on June 25 that about $10 billion of Bitcoin options are set to expire on Deribit, the world’s largest crypto options exchange, at 9 p.m. Korea Standard Time on June 26.

The max pain price for the expiry is pegged at $72,000. Bitcoin, however, is trading around $61,700, leaving a large gap between the spot price and that level.

Max pain refers to the price at which options buyers suffer the greatest losses on expiry day. For investors holding call and put options, that is the point at which the value of their contracts declines the most. Sellers of those options, by contrast, stand in a relatively favorable position.

The max pain theory holds that options sellers may steer spot prices toward the max pain level ahead of expiry, or that accumulated hedging flows may keep prices pinned near that range. The theory drew attention in crypto markets after Bitcoin traded near max pain during some monthly and quarterly expiries in 2020 and 2021.

That pattern has not emerged in this expiry. Bitcoin recently fell from around $67,000 to below $60,000, widening rather than narrowing the gap with the $72,000 max pain level.

CoinDesk said the move is adding to skepticism that max pain theory has much explanatory power in crypto options markets. Options specialists have long argued that the max pain level does not mechanically pull prices in digital-asset markets.

Jasper De Maere, an over-the-counter trader at Wintermute, said $10.2 billion of options will expire on Deribit on Friday, with the $72,000 max pain level still well above spot prices. "It’s an interesting narrative, but in recent expiries we haven’t seen prices mechanically pinned in the way people expect," he said.

That does not mean the expiry itself will have little market impact. Deribit views the June expiry as one of the biggest liquidity events of the year. As a large volume of contracts expires or is rolled into the next tenor, hedge adjustments and rollover trades may increase.

Traders are now focused less on whether Bitcoin returns to the max pain level and more on how derivatives positions are reshaped after the large expiry. With spot prices still far from max pain, volatility could still pick up around the event, CoinDesk reported.