BTC Steady Near $31K After Options Expiry, USD Index Rises Ahead Of Key US Inflation Data

Bitcoin (BTC) and Ether (ETH) held trade within recent price ranges as the expiration of quarterly options and a strengthening dollar index failed to disturb investors.

At 08:00 UTC, about 150,000 BTC options contracts, worth about $4.5 billion, and 1.2 million ether contracts, worth $2.3 billion, expired on Deribit, the world’s leading crypto options exchange. Deribit controls over 85% of global crypto options activity.

The expiration was key, considering that market makers in BTC options were “long gamma” and could have added spot price movements with hedging activities. The biggest cryptocurrency by market cap, however, traded sluggishly between $30,000 and $31[ads1],000 in the days leading up to the settlement and remained locked in the narrow range afterward, registering just a 1% gain on the day to $30,700 as of 10:40 UTC, CoinDesk data shows.

Popular theory says that price acts as a magnet ahead of expiration, with option sellers – usually large traders – trying to push prices to that level to inflict maximum losses on buyers. During the bull market in late 2020 and early 2021, bitcoin consistently gravitated towards the maximum pain point before expiration and resumed gains after the settlement.

When the expiration is over, the magnet is gone. So, the cryptocurrencies can resume their upward journeys if other factors remain unchanged.

“BTC Max Pain at a significantly reduced level of $26.5K could alleviate the prevailing downward pressure on prices after the expiration,” said Luuk Strijers, Commercial Director of Deribit.

The maximum pain point for ether June expiration options was $1,700. The native token of Ethereum was changing hands at around $1,900 at press time, a 2% gain on the day and the biggest increase in more than a week.

The dollar index ( DXY ), which tracks the U.S. currency’s value against major peers including the euro, hit a two-week high of 103.50 before press time, extending a two-day winning streak sparked by positive economic data. Notably, the weekly jobless claims figure released Thursday showed that the number of Americans filing new jobless claims fell last week by the most in 20 months.

On Friday, at 12:30 UTC, the US Bureau of Economic Analysis will release the Federal Reserve’s preferred measure of price pressures, the core price index for personal consumption expenditures, or the core PCE deflator.

The data is likely to show that core elements of inflation remain stubborn, bolstering the case for higher-for-longer US interest rates and boosting the dollar’s strength.

According to economists surveyed by FactSet and published by Barron’s, the index is likely to have risen 0.4% month over month in May after April’s 0.38% gain. The gain is estimated at 4.7% year-on-year, unchanged from last month.

Traders can also take cues from US personal spending and income numbers, which will hit the wires along with the core PCE reading.

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