Whale portfolios have quietly shifted into buying mode over the past two weeks – even as the broader crypto market absorbed one of the worst one-day liquidation events in recent history.
A massive expiration of options freezes the price
Friday’s settlement of Deribit’s March options contracts effectively led to a decline Bitcoin on hold. The expiration involves 24,838 contracts with a combined notional value of $1.72 billion, and BTC has landed right at the $70,000 strike – the exact level known as “max pain,” where the largest number of options contracts expire worthless.
That puts the price in a tight band. Traders expect prices to range between $69,000 and $71,000 until contracts settle later today.
Maximum pain is no coincidence. It describes the point at which option sellers – typically institutional market makers – absorb maximum losses from buyers.
When open interest is concentrated enough, the market tends to drift toward that level as the expiration date approaches, and that appears to be exactly what happened this week.
Bitcoin fell about 1.4% as of midnight Thursday, landing at $70,000 by the time derivatives traders were watching closely.
Longs was crushed while Shorts ran away
The damage to the broader market was severe. Data shows that 141,810 traders were liquidated in a 24-hour period, with total losses reaching $541 million.
Long positions – bets that prices would rise – accounted for $443 million, or about 80% of the total. Short sellers, on the other hand, only lost $97 million.
Bitcoin led the wreck with $191 million in liquidations. Ether followed at $165 million. The biggest loss was an $18 million ETH/USDT position on the Aster exchange, which was wiped out in one move.
Open interest, futures down
The time division tells the story clearly. The one-hour time frame showed relatively balanced liquidations of $18 million. But zoom out to four hours and the figure jumps to $126 million – and in twelve hours it reached $300 million, almost entirely from leveraged buyers who got caught on the wrong side.
Futures open interest across the sector fell 5.6% to almost $107 billion. Ether futures fell 9%, alongside a 6% drop in spot prices, a combination that suggests capital is leaving the market entirely, not just prices falling.
Funding rates for Bitcoin, Ether, Solana and BNB have all turned negative, a sign that demand for short positions is back across the board.
Featured image from Unsplash, chart from TradingView