Bitcoin options worth $1.2 billion expired on July 26, with the max pain level set at $64,500. Bitcoin closed at $64,140 — just below that threshold — leaving the market flat after a week of declining sentiment. The expiry did little to break the range, and traders are now eyeing a much larger event: a $2.5 billion options structure expiring on July 31.
The $2.5 billion bet
That structure involves 20,000 call options at $70,000 and another 20,000 at $72,000. In gross notional terms, it's worth about $2.5 billion. The bet pays out in full only if Bitcoin finishes above $70,000, with maximum profit at $72,000. With Bitcoin currently trading below $65,000, the odds of a rally that high in five days look slim — but the sheer size of the position means dealer hedging could create volatility either way.
ETF outflows and liquidations
US spot Bitcoin ETFs saw $225.2 million in outflows on July 25, snapping a seven-session inflow streak that had brought in nearly $1 billion. Leveraged long positions took a hit on July 26, with $45.9 million in liquidations versus just $7.4 million for shorts. Funding rates averaged 0.0038% on July 26, down from 0.0064% five days earlier — a sign that leverage is being unwound.
Demand and sentiment weaken
The Coinbase premium index showed a discount of 0.088% on July 26, indicating weaker US demand. The Crypto Fear and Greed Index fell to 28, down three points, squarely in fear territory. Implied volatility for Bitcoin slid toward 35%, suggesting options traders aren't pricing in a big move. Open interest in Bitcoin futures and perpetuals stood at $22.35 billion on July 26, up from $21.26 billion at the previous expiry — a modest increase that doesn't scream conviction.
Max pain losing its grip
The article notes that max pain and dealer hedging explanations for Bitcoin's price action are losing credibility as the price remains flat after two large expiries. Ethereum options worth $234 million also expired on July 26, with a max pain of $1,875 and a put-call ratio of 1.29 — bearish leaning. The market is waiting to see whether the July 31 expiry forces a decisive move or just another shrug.
