Bitcoin Price Will Perform Another Rally in May after $4.2B Options Expiry?

Bitcoin as begun the monthly options expiry week on a positive note, rising from $48,000 to over $54,000. What's interesting about this particular options expiry is that the current max pain price for the expiry is $54,000, which is very close to the current trading price. 

 

Call and put sellers, typically institutions with ample capital supply, often manipulate and pin the price of the underlying toward the max pain point while heading into the expiry.

 

In other words, buyers of call and put options expiring on April 30 will suffer maximum loss if bitcoin settles at $54,000 on Friday. Meanwhile, sellers would make the highest profit. Therefore, option writers may try and keep prices around $54,000.

 

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Monthly options expiry is a significant event for the Bitcoin price trend. Even though Bitcoin hit its all-time high of $64,900 on April 21, it saw a 27% drop almost immediately as its price fell as low as the $46,000 range. 

  

Bitcoin has averaged a 30% return in April over the past four years. But the market leader returned much more in the first quarter of this year than in previous years. It's not bad for Bitcoin to take a pause in April after the previous parabolic run.

 

April has been no different in terms of continued institutional adoption of the asset. One way to gauge institutional moves is through outflows from crypto exchange Coinbase Pro. The exchange normally integrates its custody wallets with its over-the-counter desks, which institutions usually trade through to minimize the impact on the spot markets. The outflows are seen as a representation of institutional activity in the BTC market. 

 

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The $4.2 billion options expiry didn't lead to much of an economic impact for options holders, it is likely that BTC will skyrocket to $70,000 in May.

 

Bitcoin Price Analysis

On the daily chart, Bitcoin is trading above MA5 and MA10, but under the pressure of MA20 and MA30 resistance. Moreover, the MA30 and MA20 forms a golden fork, which indicates that a mid-term bullish trend. MACD and RSI also give bullish signals, Bitcoin is nurturing the uptrend towards $60,000.

 

Support: $53,000, $51,000, $48,000

Resistance: $56,000, $58,000, $60,000

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