Forget max pain theory. Bitcoin is well below the $72,000 magnet going into $10 billion options expiry

Bitcoin’s BTC$61,650.42 price drop ahead of Friday's quarterly options settlement has once again cast doubt on the popular “max pain theory."

The max pain level for this expiry stands at $72,000, significantly above current spot prices of around $61,700. On Friday at 8:00 ET, options worth $10 billion will expire on Deribit, the world's largest crypto options exchange.

Max pain, as the name suggests, refers to the price level where options buyers – those who purchased call and put contracts to hedge against volatility – would lose the most money on expiry. In that scenario, option buyers suffer maximum losses, while their counter parties who sold options (also known as writers) stand to benefit.

The theory suggests that ahead of expiry, these option writers actively try to push the spot price toward the max pain level, effectively pinning bitcoin there. Crypto social media has long embraced the idea, particularly after BTC appeared to gravitate toward the max pain point ahead of several monthly and quarterly settlements in 2020–2021. That pattern, even if partly coincidental and driven by other market forces, helped solidify belief in the theory.

But the recent decline from $67,000 to under $60,000 Wednesday, which comes days ahead of the settlement, contradicts that theory.

It aligns with the long-held skepticism of options experts like Tony Stewart, founder of Pelion Capital, who has repeatedly argued that the max pain theory carries limited weight in crypto markets.

Moreover, the so-called pinning effect has also been largely missing from recent expiries.

“Friday’s expiry is something to keep an eye on with $10.2b rolling off Deribit with max pain at $72k, well above spot. Despite it being a compelling narrative, recent option expiries haven’t really mechanically pinned down prices in the way people expect them to do,” Jasper De Maere, OTC trader at leading crypto market maker Wintermute, said in an email.

That doesn’t mean the event is irrelevant. Deribit has described the June expiry as one of the year’s biggest liquidity events, with billions of dollars in contracts set to expire or roll over into future settlements, a process that often fuels heightened volatility.