Author: CryptoSlate

Translation: Deep Tide TechFlow

Deep Tide Introduction: Throughout July, traders have been blaming the options wall for locking Bitcoin in place. But the wall has been dismantled twice, yet the price remains unchanged. Now a $2.5 billion bullish options bet is about to expire, while Bitcoin is still 9% away from the $70,000 target—the real problem is not option suppression, but that no one is buying at all.

Traders have had a good reason all July to explain why Bitcoin hasn’t moved: the dense options contracts confined the price. They believed that market makers selling these contracts would buy on every dip and sell on every rise to balance their books. Once the contracts were settled, Bitcoin could finally move freely.

Now that contracts have been settled for two consecutive Fridays, Bitcoin is still in place. On Saturday, its trading price was just below $64,000, ending the week—this week it failed to hold $66,000 and then fell back to the price that should theoretically be "protected." That good reason has expired, leaving behind a dull fact: demand for Bitcoin is weak, and both buyers and sellers are weak.

The options numbers everyone is watching, and what they can tell you

About 19,000 Bitcoin options expired on Deribit at 08:00 UTC on Friday, worth approximately $1.2 billion. Deribit handles the majority of cryptocurrency options trading. The exchange set the maximum pain point for this expiry at $64,500. Bitcoin closed that day at $64,140, approximately $360 below the maximum pain point, opening at $65,099 and hitting a low of $63,740 during the day.

The maximum pain point for similarly sized expired contracts the previous Friday was $63,000, while Bitcoin rose to $65,400 in the following days. Two expiries, two opposite outcomes, and in either case, the maximum pain point didn’t seem to pull anything.

The maximum pain point is a number referenced weekly, as if it itself were a force. An option is a contract that grants someone the right to buy or sell Bitcoin at a set price on a set date, while the maximum pain point is just a price—at this price, sellers of these contracts need to pay the least amount at settlement. It is a snapshot of the betting piled up, calculated based on the current open contracts. It has no mechanism to pull prices towards it.

The $1.2 billion figure also needs to be treated similarly. That is the face value of the Bitcoin referenced by the contracts, while the money actually at risk is only a small part of that. We also cannot confidently say which direction market makers were forced to hedge to settlement because exchange data shows how many contracts exist at each strike price, not who holds which side.

Confident assertions about market maker positions are almost always based on assumptions, and the growth of the options market has made these assumptions costly. Ethereum contributed another $234 million to the Friday settlement, with a maximum pain point of $1,875, showing a full month of demand for downside protection.

What really happened on Friday is easily seen in the trading data. CryptoQuant's all-exchange data tracks which side of the market is crossing the spreads, a good indicator of who is in a hurry.

Traders holding leveraged long positions were forced to close $45.9 million on Friday, while the short side only closed $7.4 million, a roughly six-to-one imbalance.

Leverage itself remains sluggish. The funding rate—the fee leveraged longs pay to shorts to keep their positions open—averaged 0.0038% across exchanges on Friday, lower than 0.0064% five days ago, nearly neutral. Open contracts for futures and perpetual contracts closed at $22.35 billion, up from $21.26 billion at the last expiry settlement, even though the price fell 1.5%, open contracts on Friday were still on the rise. New positions entered during the downturn.

The U.S. spot Bitcoin ETF saw an outflow of $225.2 million on Thursday, ending a seven-day streak that attracted nearly $1 billion, with BlackRock's IBIT accounting for $202.5 million of the reversal. However, this week still closed with a positive inflow of about $274 million.

The renewed tension between the U.S. and Iran pushed the stock market lower before the weekend, dragging down cryptocurrencies; the cryptocurrency fear and greed index fell three points to 28, with implied volatility sliding to 35%.

The remaining bets are still 9% away from the target

Deribit holds nearly $5 billion in open contracts at the $70,000 and $72,000 strike prices for the July 31 monthly expiry, accounting for about 18% of the entire $28 billion Bitcoin options book on the exchange. Calls dominate at both strike prices. As of July 20, about 27,000 contracts were at $70,000, and approximately 21,000 at $72,000.

A single structure took up a large portion of this. Deribit's Chief Business Officer Jean-David Péquignot described a single large order that bought 20,000 $70,000 calls and sold 20,000 $72,000 calls, with the total nominal value of this combination being approximately $2.5 billion.

If Bitcoin closes above $70,000, this trade will profit, and once it breaks $72,000, no further profits will accrue, and the upfront cost is lower than that of separately buying calls at the lower strike price, as selling the higher strike price offsets part of the premium. Whoever established this position wants to achieve a specific rise within a certain time window and is paying for it.

This time window has its reasons. Jimmy Yang of institutional liquidity provider Orbit Markets linked the bullish demand for July 31 with the expectation that the CLARITY act will pass, while traders have been cutting positions.

Polymarket now prices the probability of passage in 2026 at about 35%, down from over 80% in February, when the merged banking-agriculture bill removed the ethical provisions required by Democrats, leading to formal opposition from Senators Chris Murphy, Chris Van Hollen, and Jeff Merkley. The August recess leaves a narrow window for Senate action.

The expiry date also comes two days after the Federal Reserve's decision. The FOMC will meet on July 28 and 29, with a statement to be released at 2:00 PM ET on Wednesday, followed by a press conference with Kevin Warsh half an hour later.

This meeting has no accompanying economic forecasts, so the phrasing of the statement carries all the signals. Rates have been maintained at 3.50% to 3.75% for four consecutive meetings, with the futures market assigning about one-third probability for a 25 basis point increase, while the probability of a rate cut is effectively zero.

Governor Lisa Cook noted an inflation rate of 3.7%, while Vice Chair Philip Jefferson and Governor Christopher Waller both warned that if prices remain high, policy may be reexamined.

Bitcoin must rise about 9% in six days to make the $70,000 strike price in-the-money, while Deribit's own probability set the likelihood of prices touching that level during July at 14.5%, with $72,000 at 4.1%.

Gamma exposure—an indicator measuring how aggressively market makers need to adjust hedges during price changes—concentrates around $65,000 and $72,000. The near-term cluster is right at the market top and quite small. The large cluster is far enough away that there is nearly no incentive before Bitcoin shrinks the majority of the distance itself.

So, the strongest beliefs in the Bitcoin options market are concentrated on a price that the market gives itself less than one-sixth chance of reaching, and it expires 48 hours after a central bank meeting that no one can confidently predict.

The two weekly expiries that have drawn all attention this month have settled, and nothing has changed. Bitcoin's range belongs to anyone who appears in the spot market, and in the past week, very few have done so.