The cryptocurrency market faced another wave of selling pressure on May 28, 2021, as Bitcoin tumbled below the $36,000 mark and approximately $2.1 billion worth of Bitcoin options contracts expired — capping off what has been crypto’s worst month of the year. The convergence of these two events created a perfect storm of volatility that left traders and investors scrambling to make sense of the rapidly shifting landscape.
TL;DR
- Bitcoin dropped 7% to approximately $35,997, with the broader market sliding in tandem
- $2.1 billion in Bitcoin options expired on Friday with a max pain price of $50,000
- Ethereum fell 9.3% to $2,501, while Dogecoin shed 4% to $0.32
- BTC had briefly reclaimed $40,000 on Wednesday before rolling over
- The expiry marked the smallest options volume of 2021 so far
Bitcoin Options Expiry: A $2.1 Billion Event
The options market played a central role in Friday’s price action. Roughly $2.1 billion in Bitcoin options contracts were set to expire, with the max pain price — the price at which the most options expire worthless — sitting at $50,000. With Bitcoin trading nearly 30% below that level at around $36,000, the expiry put significant downward pressure on an already fragile market.
This month’s options expiry was notably smaller than previous months, reflecting the broader retreat in crypto market activity throughout May. The reduced volume suggested that many traders had already deleveraged or exited positions during the sharp sell-off that began in mid-May, when Bitcoin crashed from its all-time highs near $64,000 down to the $30,000 range.
Bitcoin’s Bruising Week
Bitcoin was down 10.3% over the trailing seven days, according to data compiled by CryptoPotato. The week began with a dramatic plunge to $31,185 on Sunday, May 23 — the lowest level since late January. While buyers managed to close the daily candle above that level at $34,760, the damage to sentiment was already done.
A mid-week recovery saw Bitcoin surge back above $40,000 on Wednesday, May 26, briefly touching $40,765. However, the rally was stopped dead in its tracks at the 200-day moving average and a bearish .382 Fibonacci retracement level — two critical technical resistance zones. From there, sellers took control once again, driving BTC back down through $38,000 and ultimately to the $36,000 level by Friday.
The technical picture painted a clear narrative: Bitcoin was trapped in a battle between dip buyers and determined sellers, with each relief rally met with fresh selling pressure. Key support levels to the downside included $34,760, $33,520, $32,465, and the psychologically critical $30,000 mark.
Ethereum and Altcoins Join the Slide
Ethereum mirrored Bitcoin’s struggles, falling 9.3% on the day to $2,501. The world’s second-largest cryptocurrency was down 9.7% for the week, trading around $2,470. ETH had its own dramatic swing on Sunday, briefly dipping below $1,800 before closing above $2,100. A recovery to $2,891 on Wednesday proved fleeting, as ETH failed to break through the bearish .382 Fibonacci retracement and subsequently rolled over.
Even Dogecoin, which had enjoyed significant retail attention throughout 2021, was not spared from the carnage. The meme-inspired cryptocurrency fell 4% to $0.32, continuing its retreat from the speculative highs seen earlier in the month.
Cathie Wood and Goldman Sachs Weigh In
Despite the gloomy price action, prominent voices in traditional finance continued to engage with the crypto space. Cathie Wood, founder and CEO of Ark Investment Management, spoke at CoinDesk’s Consensus 2021 conference on May 27, arguing that Bitcoin has a place in a deflationary world. Wood suggested that emerging markets — where currencies are often linked to commodity price cyclicality — could ultimately drive Bitcoin outperformance as their populations shift into cryptocurrency.
Meanwhile, Goldman Sachs released a 41-page research note examining whether Bitcoin and Ethereum should be considered a legitimate asset class. The note reflected growing institutional interest in crypto even as prices pulled back sharply from their peaks.
Why This Matters
The May 28 options expiry represented a critical juncture for a market that had already endured one of its most brutal months. With $2.1 billion in derivatives expiring far below the max pain price of $50,000, the structure of the options market itself was contributing to downside volatility. For traders and investors, the key question was whether Bitcoin would hold the $30,000–$35,000 support zone or break down further into uncharted territory. The involvement of major institutional players like Goldman Sachs and Ark Invest, alongside the record-setting options expiry, underscored how significantly the crypto market had matured — even in the midst of a painful correction.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always do your own research before making investment decisions.
max pain at 50k while BTC traded at 36k. the market was already 30% below the pain point which meant options holders were getting destroyed across the board
doge at 32 cents while btc bled 7%. the meme coin era was completely disconnected from any options narrative
max pain at 50k with spot at 36k and retail kept longing. 28pct gap is not a trade opportunity its a warning sign. dealers were never going to let price recover before expiry
taleb_kep_ 28pct below max pain and people were opening new longs. the gamma squeeze on the way down is just as mechanical as the squeeze up except retail never learns the direction
Max pain at 50K with BTC trading at 36K. The market was already 30% below where the options writers needed it. Pure one-sided carnage.
max pain at 50k with spot at 36k means market makers were already fully printed. that expiry was pure mechanical selling into dealer hedging
iv_skew_ exactly. 28 percent gap between spot and max pain. dealers were short puts and forced to delta hedge into the decline. classic gamma squeeze but in reverse
funding_flip_ dealer gamma hedging into the decline is the mechanism nobody explains. spot was 30% below max pain which means dealers were short puts and forced to sell spot to hedge. pure one-directional pressure
ETH dropping 9.3% the same day as the options expiry was not a coincidence. the entire options market was priced for a rally that never came
Berit L. ETH dropping 9.3% the same day was not random. ETH options were also expiring and the ETH/BTC ratio was in freefall. everything was mechanically forced lower by dealer hedging
ETH dropping 9.3% to 2501 while BTC only fell 7%. The ETH/BTC ratio was getting destroyed during May 2021 and nobody talked about it because everything was bleeding.
DOG at 32 cents doing real volume while BTC melted. the meme rotation during the may 2021 crash was the ultimate copium trade
DOGE at 0.32 doing real volume while BTC melted 7pct. May 2021 was when doge decoupled from BTC and nobody in the options market even mentioned it
max pain at $50K with BTC trading $36K. thats a 28% gap. market makers were printing money on those puts
btc at 36k with max pain at 50k. the market makers feasted that week
28% gap between max pain and spot and retail was still longing hoping for a bounce. classic
samosa_trader retail was longing at 36k with max pain at 50k. the put writers were literally printing. you cant make this up
smallest options volume of 2021 at $2.1B and still enough to move the market 7%. derivatives run this thing
Igor N. $2.1B was the smallest volume of 2021 and BTC still dropped 7%. imagine what the bigger expiries did to spot price
derivatives run it until they dont. the unwinds are faster every cycle
max pain at 50k with BTC trading at 36k. thats a 14k gap. market makers were absolutely printing that day
ETH at 2501 and DOGE at 0.32. people forget doge was a top 10 coin doing real volume during the may 2021 crash
max_pain_rat 30 percent below max pain and retail was still longing. market makers were feasting on puts that week, absolute slaughter
Wei C. ETH dropping 9.3 percent while BTC fell 7 percent. the ETH/BTC ratio was in free fall and CT was distracted by doge hitting 32 cents
smallest options expiry of 2021 and BTC still dropped 7 percent. the leverage in this market is a feature not a bug
smallest options expiry of 2021 at 2.1B and BTC still dropped 7%. imagine the damage when the 6B expiries hit