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In the past two weeks, the Bitcoin price appears to have lost momentum and some analysts suggest that bears will be in control for the foreseeable future.

Taking a look at the derivatives market data gives us a clearer picture of what is happening on the institutional side and how the movements of larger players can affect spot markets.

After a peak of $ 10.6 billion on January 14, outstanding interest on Bitcoin (BTC) down to $ 8.4 billion. The monthly expiration date of January 29 remains apart, totaling 47% of the available options.

While a $ 4 billion expiration date could be significant, it should be remembered that these options are split into call options (neutral to bullish) and the more bearish put options. Plus, the option to buy BTC for $ 52,000 on January 29 might have made sense a few weeks ago, but not so much now.

BTC options pool open interest. Source: Bybt.com

As the above data shows, Deribit Exchange remains the absolute leader with 83% market share. Nevertheless, to understand how turbulent this expiration could be, one has to adjust data and compare both calls and put options near the current $ 32,000 BTC level.

It’s too early to panic

Most exchanges offer monthly expiration and some also have weekly options for short term contracts. December 25, 2020 had the largest expiration date ever as $ 2.4 billion in options contracts expired. This figure represented 31% of all outstanding interest and showed how options are typically spread over the year.

Aggregated BTC options open interest at maturity. Source: bybt.com

Data from Bybt.com shows that the Jan. 29 expiration calendar is good for 107,000 BTC. This maturity date represents 45% of the total open interest on the options market.

It’s worth noting that not every option trades on maturity as some of those strikes now sound unreasonable, especially given that there are less than five days left.

BTC January 29 total options open interest per strike. Source: bybt.com

When Bitcoin marked its new all-time high of $ 42,000, some ultra bullish call options traded, but as the price of the BTC adjusted, those short-term options became worthless.

Currently, more than 68% of January 29 call options for $ 40,000 and above must be excluded from the calculation. The same can be said for the bearish put options of $ 25,000 and below. These represent 76% of the outstanding interest.

This data leaves an estimated $ 745 million in call options of less than $ 40,000 for the total options expiring on January 29. Meanwhile, the more bearish put options above $ 25,000 are worth $ 300 million. Therefore, the adjusted interest outstanding on January 29 is $ 1.05 billion, while maintaining a put-to-call ratio of 0.40.

Skew shows that market makers are not prepared to take upside risks

Analyzing outstanding interest provides data on transactions that have already passed, while the skew indicator monitors options in real time. This gauge is even more relevant as BTC traded below $ 23,500 just thirty days ago. Therefore, open interest rates near that level do not indicate bearishness.

When analyzing options, the delta skew of 30% to 20% is the most relevant measure. This indicator compares call (buy) and put (sell) options side by side.

A delta skew of 10% indicates that call options are trading at a slight premium over the more bearish / neutral put options. On the other hand, a negative skew translates into a higher cost of downside protection and is a sign that traders are bearish.

Deribit Bitcoin Options 30-20% delta skew. Source: genesisvolatility.io

According to the data shown above, the last time bearish sentiment surfaced was on January 10th, when the Bitcoin price crashed by 15%. This move was followed by an extreme delta skew of 30% to 20% as optimism reached 49, a level unseen in the past 12 months.

Whenever this indicator crosses 20, it reflects the fear of potential price increases from market makers and professionals, and is considered bullish. On the other hand, the current 0 to 10 range that has been held since January 20 is considered neutral.

While the expiration of $ 4 billion options can be worrisome, nearly 74% of options are already considered worthless. With regard to the January 29 maturity date, the bulls remain in control mainly due to the much larger adjusted open rate.

Bears are quite comfortable at $ 32,000

Jan 29 BTC aggregated options open interest per strike. Source: Bybt.com

Despite bulls having a general advantage, the more bearish put options dominate expirations between $ 33,000 and $ 35,000. Nevertheless, this 1,200 BTC contract advantage is more than offset by the contract imbalance of 1,950 BTC, favoring the $ 28,000 to $ 32,000 call options.

In conclusion, as things stand, bulls appear to be in full control of Friday’s ending, although incentives between $ 28,000 and $ 35,000 are fairly balanced. Overall, there is not much to be gained from either side to create additional volatility before January 29.

The views and opinions expressed here are solely those of the author and do not necessarily reflect Cointelegraph’s opinion. Every investment and trade move carries risks. You should do your own research when making a decision.