In a piece for ForkLog, trader and Coen+ Telegram channel author Vladimir Koen analyzed the positioning in the Bitcoin options market ahead of the August 28 expiration. He suggests that the mechanical demand that fueled Bitcoin's recent surge to $80,000 has been exhausted, and the $82,000 mark could become a near-term ceiling for the cryptocurrency's price.
Currently, Bitcoin is trading at approximately $79,450. Over the past week, the leading cryptocurrency has gained 23%, but it remains down 9.2% year-to-date. We are witnessing a strong rebound from a significant downturn, yet confirmation of a trend reversal is still needed.
There are three major expirations scheduled over the next month, with roughly $18.6 billion in open interest:
- August 28 — 81,666 contracts worth $6.43 billion;
- September 4 — weekly expiration worth $1.55 billion;
- September 25 — quarterly expiration with 134,970 contracts totaling $10.62 billion.
The maximum pain levels for the expirations on August 28 and September 4 are set at $68,000, while for the quarterly expiration, it is at $70,000.
This setup formed while Bitcoin traded within the $62,000–66,000 range for about six weeks. The price then broke out of that range by more than 15% in just three sessions. The positioning did not have time to adjust, making the maximum pain a relic of the past rather than a reliable indicator.
When Bitcoin was around $64,000, market makers were selling call options with strikes between $67,000 and $75,000. Upon exercising such options, the seller is obligated to fulfill them, which requires buying Bitcoin as the price rises.
This mechanical buying was a key driver behind the rally from August 19 to 21, where the market surged from approximately $64,000 to $78,000 with volumes three times higher than the August average.
Hourly chart of BTC/USDT on Binance. Source: TradingView.At this point, the primary work is largely complete: 68% of the calls are deeply in the money, meaning the necessary hedging volume has been accumulated. The engine driving the price upward has stalled. Consequently, the market has struggled to hold above $80,000 for four consecutive sessions.
Insurance Below $70,000 Has Burned Out
Formally, the put-to-call ratio for the August expiration appears balanced at 0.83. However, 83% of all puts are on strikes below $70,000, which is 12% less than the current price just three days before expiration. This represents insurance that has already burned out.
For the September 4 expiration, the maximum volume is concentrated at the $82,000 strike, amounting to about $185 million, or roughly 12% of the total weekly expiration.
The ratio at the $80,000 strike suggests that this is likely not just a straightforward bullish bet, but rather a related options structure. Its maximum profit is achieved at $82,000, and any price movement above $84,000 will result in losses for the position. Thus, $82,000 will act as a cap until the market surpasses $84,000.
Once above this level, the dynamics shift, and the same structure begins to push the price higher.
Scenarios Leading Up to the August 28 Expiration
- Base Scenario — 55%. Bitcoin remains within the $78,000–81,800 range.
- Breakout Upwards — 25%. A move above $81,300 leading to the $81,800–84,500 zone through short squeezes.
- Breakdown Below $78,000 — 20%. A cascade of long liquidations driving the price down to $75,000–77,000.
Post-expiration, the situation qualitatively changes.
Call sellers, who have held Bitcoin against sold options, will no longer need to hedge and may begin to sell off their holdings. This delayed supply, exceeding $1 billion, could exert downward pressure on the market.
To be continued.