Bitcoin’s price traded below the $40,000 support on Jan. 18 for the first time in 50 days, and the upcoming $4.5 billion BTC monthly options expiry on Jan. 26 might hold the key to whether the downtrend will continue. Oddly enough, the U.S. stock market reached an all-time high on Jan. 22, indicating that whatever held back Bitcoin’s performance is unlikely to be related to the macroeconomic scenario.

GBTC ETF outflows triggered bearish sentiment

Some analysts argue that most of the sellingpressure comes from the Grayscale GBTC, which experienced significant outflows since its conversion to a spot exchange-traded fund (ETF) on Jan. 11. The instrument holds over $25 billion in assets, and despite being listed since 2015 in the form of a Trust fund, its investors were previously unable to request redemptions.

Bitcoin influencer @alanbwt described the situation on X social network as "the biggest blown lead in the history of Bitcoin," considering Grayscale's GBTC entered Jan. 11 with a $27 billion capitalization, whileFidelity, BlackRock, Bitwise, and the remaining contenders had to start from scratch. However, Grayscale opted for a 1.5% yearly administration fee—far higher than its incumbents—triggering the selling pressure on GBTC shares.

Bitcoin's downside since the spot ETF trading debut on Jan. 12 coincides with the U.S. 2-year Treasury yield bottoming at 4.12%. From there, investors no longer sought protection in fixed income as the yield soared to the present 4.39%, marking a reversion of a 3-month movement. The most likely explanation,accordingto Yahoo Finance, is the recent economic indicators, which suggested that "the Federal Reserve (Fed) may not shift to a less restrictive posture as soon as previously expected."

The answer to whether the Fed will start cutting interest rates over the next couple of months depends on the gross domestic product data for the fourth quarter on Jan. 25 and the Personal Consumption Expenditures index (PCE) on inflation on Jan. 26. Unfortunately for Bitcoin investors, the longer the interest rates remain high, the less the incentives for investors to seek exposure in commodities—as opposed to stocks, for instance, which tend to pay dividends.

In essence, Bitcoin investors will have to wait until 8:00 am UTC to conclude if bulls have really blown billions of dollars worth of call (buy) options based solely on the expectation of a price rally after the spot ETF approval.

Data shows bulls were excessively optimistic about the spot ETF approval

The open interest for the options expiry on Jan. 26 stands at $4.5 billion, but the final amount will be way less due to traders foreseeing price levels reaching $42,000 or even higher. The unexpected 15% correction in Bitcoin's price from Jan. 11 to Jan. 22 caught bullish investors off guard, as evident from the Deribit Bitcoin options interest chart.

Deribit Bitcoin options open interest for Jan. 26. Source: Deribit

Deribit’s 0.55 BTC put-to-call ratio reflects the imbalance between the $2.42 billion in call (buy) open interest and the $1.32 billion of put (sell) options. CME Bitcoin options presented a similar ratio on a total $650 million open interest, while the OKX exchange held a more balanced relation between call and put options for a $290 million total exposure. Lastly, Bybit and Binance held a combined $290 million open interest for the Jan. 26 BTC options expiry.

To put things in perspective, if Bitcoin’s price trades at $39,900 on the January monthly expiry, only $55 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $40,000 or $42,000 is useless if BTC trades below that level on expiry. Meanwhile, the put options at $40,000 or higher amount to $270 million; therefore, the BTC Jan. 26 options could present a sizable opportunity for bears to exert short-term pressure.