With $249M Gamma for S&P 500 (SPX), it could catalyze massive volatility that could bleed into the stock and crypto market, especially with Bitcoin (BTC). Here’s how BTC price may react to this Friday’s options expiry. Will Bitcoin (BTC) crash to $100,000 or lower or bounce to new ATHs?
S&P 500 at OPEX Risk: Gamma Cliff Ahead
According to data from Menthor Q, Friday’s “exipiration is massive.” The S&P 500 (SPX) faces a high-stakes test on May 16, as $249 million in gamma exposure (34.9%) rolls off during monthly options expiry (OPEX). With $223 billion in delta hedging flows in play, dealers’ unwind could flatten volatility and spark a directional move, potentially downward.
What is OPEX?
- Options Expiration (OPEX) occurs monthly on the third Friday when derivatives contracts expire and market makers reset their hedges.
- During OPEX, dealers unwind their gamma exposure, essentially hedging against large price moves, which can induce significant volatility. As in-the-money options are exercised or assigned, prices often “pin” to strikes with high open interest.
This month, the S&P 500 faces higher risk than usual due to the expiry of 249 million in gamma exposure. The risk is mainly in the form of directional moves caused by deal flow stabilization. Hence, a roll off in gamma often causes key price support or resistance levels to vanish, leading to rapid breakouts or reversal scenarios.
With that in mind, here are some key levels to watch for the S&P 500 to understand how it affects Bitcoin (BTC) price and the broader crypto markets.
- In a bull case, investors can expect the S&P 500 to hold above 5,900 and potentially target 5,930, which is a major call open interest zone.
- On the contrary, a breakdown below 5,900 risks a drop to 5,830–5,790, a zone where puts dominate.
Due to the correlation between the stock market and cryptos, a risk-off sentiment in the S&P 500 could also influence BTC price moves as well.
BTC Price Analysis: Bitcoin’s Make-or-Break Moment
As noted above, Bitcoin (BTC) price mirrors the S&P 500’s fragility ahead of Friday’s options expiry. BTC trades today at $102,601 and is leaning bearish. Here are two scenarios that investors can expect for BTC.
- Auction Market Theory suggests acceptance at $102.8k could trigger a 10%+ correction to $93.1k. However, the outlook is not so straightforward.
- The single-print support zone, extending from $99.8K to $100.3K could be a good support zone to watch for spike in demand, halting or at least slowing the downtrend.
- If this zone holds, investors can expect BTC price to revisit all-time high (ATH) at $109k.
- If the bullish momentum persists, BTC could extend to the 161.8% Fibonacci extension level at $118.7k. A massively bullish outlook could see 261.8% Fibonacci extension retest of $135.5K.
With that, the Bitcoin price prediction remains bearish with a short-term bottom formation at $99k to $98k, depending on how BTC reacts to the $100k level.
Why This Matters for US Investors
Over 60% of S&P 500 options volume stems from US institutions, making Friday’s expiry a localized risk event. Hence, it is a key event to watch for US investors. SpotGamma’s tweet outlines,
“Friday’s expiration is setting up to be the most lopsided ever, as call values trounce the value of puts. I mean, 90% of Index options value expiring on 5/16 is calls?!?!”
The massive spot Bitcoin ETF inflows effectively tie the crypto market to equities. Hence, a stock selloff could force liquidations in the crypto market as well..
Trading Strategy for S&P 500 & BTC traders
- SPX Traders: Watch 5,900 as a gamma flip zone. A breakdown targets 5,790.
- Bitcoin Traders: A $104.5K reclaim hints at recovery; failure at $102.8K signals trouble.
Conclusion
Friday’s OPEX is a potential catalyst for cross-asset chaos. If the S&P 500 stumbles under gamma pressure, Bitcoin’s correlation could drag it below $100K—or worse. Traders should brace for volatility and watch the US market close for clues.
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