Bitcoin remains stable around $31K after options expiry, while the dollar index increases ahead of crucial U.S. inflation data.

Bitcoin (BTC) and ether (ETH) have been trading within recent price ranges despite the expiration of quarterly options and a strengthening dollar index failing to unsettle investors.

At 08:00 UTC, around 150,000 BTC options contracts, worth around $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 significant because market makers in BTC options were “long gamma” and could have influenced spot price moves with their hedging activities. However, the largest cryptocurrency by market value traded between $30,000 and $31,000 in the days leading up to the settlement and remained in that narrow range afterward, recording just a 1% gain on the day to $30,700 as of 10:40 UTC, according to blockchain data.

The so-called max pain point for June bitcoin options was $26,500. This is the level at which option buyers stand to lose the most at expiration.

According to a popular theory, the price acts as a magnet leading up to expiration, with option sellers, usually large traders, trying to push prices to that level to cause maximum loss for buyers. During the bull market of late 2020 and early 2021, bitcoin consistently gravitated toward the max pain point ahead of expirations and resumed gains after the settlement.

With the expiration over, the magnet effect is gone. So, the cryptocurrencies could resume their upward journeys if other factors remain unchanged.

“BTC Max Pain at a significantly reduced level of $26.5K might alleviate the prevailing downward pressure on prices following the expiration,” said Luuk Strijers, chief commercial officer at Deribit.

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

Dollar gains ahead of Core PCE

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

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

The data is likely to show that the core elements of inflation remain stubborn, strengthening the case for higher-for-longer interest rates in the U.S. and adding to 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 a 0.38% rise in April. The gain is forecasted at 4.7% year on year, unchanged from the previous month.

A rally in DXY typically leads to financial tightening worldwide and risk aversion in markets. However, losses in bitcoin may be moderate this time or short-lived, as the recent spot BTC ETF filings by BlackRock, Invesco, and Fidelity have buoyed the crypto market sentiment.

Traders may also take cues from the U.S. personal spending and income figures, which will be released along with the core PCE reading.

Edited by Sheldon Reback.

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