The cryptocurrency market could experience a major upheaval as investors brace for the expiry of over $12 billion worth of Bitcoin options on Friday.

What happened: According to leading cryptocurrency derivatives exchange Deribit, Bitcoin options contracts, with about $12.14 billion in notional value, are set to expire at 4:00 a.m. ET.

This expiry accounted for 43% of the total Open Interest for BTC options, valued at around $27.98 billion. 

Options are derivatives that give the contract buyer the right, but not the obligation, to buy or sell the underlying asset at a predetermined price and date. A call option gives the purchaser the right to buy an asset, while a put option allows them to sell assets at an agreed-upon price.

As of this writing, the put/call ratio was 0.49, indicating a bullish sentiment as more traders were betting on price increases.

The maximum pain price was set to $85,000 as of this writing, implying that  buyers will suffer the most losses if Bitcoin dips to this level.

See Also: Trump Endorses Pro-Bitcoin Senator Cynthia Lummis For Re-Election, Says She Is Working To Make US The Crypto Capital

Why It Matters: Widely followed cryptocurrency analyst and trader Satoshi Stacker warned that the mega event may spark volatility.

CryptoInsighPro, another X account dedicated to cryptocurrency analysis, stated that when large amounts of options expire, volatility rises due to market expiry-price-dependent buying and selling.

The analyst explained that if call options expire "in the money," it means Bitcoin's price at expiration is higher than the predetermined price, and therefore, holders will buy BTC, resulting in bullish pressure.

Conversely, if put options expire "in the money," it means the situation is favorable for sellers and they would sell at a price higher than BTC's market price. 

Price Action:  At the time of writing, Bitcoin was exchanging hands at $86,838.01, up 0.91% in the last 24 hours, according to data from Benzinga Pro.

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