Crypto Braces for $8.2B Bitcoin and Ethereum Options Expiry

• Today’s massive $8.2 billion options expiry for Bitcoin and Ether has the potential to trigger price swings.
• Analysts have been watching the “put/call ratio” to gauge market sentiment.
• Bitcoin options have shown a surprising number of bets on a major price surge to $100,000.
  

Today marks a potentially volatile day for the cryptocurrency market as a massive $8.2 billion in options contracts for Bitcoin (BTC) and Ether (ETH) expire. This expiry has historically been linked to price swings, and analysts are closely watching how it will impact the current market sentiment.

Max Pain Looms for Leverage Traders

The options contracts expiring today represent 69,000 Bitcoin options valued at $4.7 billion and 920,000 Ether options valued at $3.5 billion. Data from Deribit, a major crypto derivatives exchange, reveals a put/call ratio of 0.61 for Bitcoin options. This indicates that more call options (bullish bets) are expiring compared to put options (bearish bets).

Bitcoin Open Interest Chart. Source: GreeksLive

The put/call ratio (PCR) is a key technical indicator that gauges trader sentiment. A ratio below 0.7 suggests a bullish market, while a value above 1 signifies a bearish one. Bitcoin’s PCR of 0.61 leans towards optimism, while Ether’s ratio of 0.46 reflects even stronger bullish sentiment.

However, the options expiry also introduces an element of risk for leveraged traders. The “max pain” price point for expiring Bitcoin options sits at $66,000, signifying the price at which the most significant losses would be incurred by leveraged traders. 

Currently, Bitcoin is trading at $68,210, providing some breathing room above the pain point. Similarly, the max pain point for Ether options rests at $3,300, with the current price of $3,738 offering some buffer.

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BTC Options All Expiration: Open Interest By Strike Price. Source: Deribit

Further analysis reveals significant open interest (OI) positions concentrated in long positions (bullish bets) with strike prices ranging from $70,000 all the way up to $100,000 for Bitcoin. Open interest refers to the total number of outstanding derivative contracts. 

Delayed Spot ETH ETF Launch

Notably, a substantial $886 million in open interest lies at the $100,000 strike price for Bitcoin options, indicating a potentially large number of traders betting on a significant price increase. The total notional value of all outstanding Bitcoin options contracts currently stands at a staggering $19 billion.

The recent approval of a spot-based Ether ETF by the Securities and Exchange Commission (SEC) in May was initially seen as a bullish catalyst for the crypto market. In anticipation, ETH prices surged by 20%. However, the SEC’s approval only pertained to the 19b-4 filing, delaying the actual launch of the ETF for trading.

This delay appears to have cast a shadow of uncertainty on the market. Since the news, both Bitcoin and Ether have struggled to break through key resistance levels, with ETH remaining below $4,000 and Bitcoin hovering beneath the $70,000 barrier. As the options expiry coincides with this ongoing correction, the coming hours could see increased volatility in the crypto market.

On the Flipside

• Historically, options expiry has been linked to volatility, but some analysts believe the size of the expiring contracts this time around may be overstated.
• The bullish sentiment suggested by the put/call ratio could be misleading. 
• The high concentration of open interest at lofty strike prices for Bitcoin options might not translate to actual price hikes.

Why This Matters

This large options expiry, concentrated in bullish bets, could trigger significant price swings for Bitcoin and Ether. The presence of a large number of options at high strike prices suggests potential for a price surge if bulls maintain control, but also carries the risk of a correction if the market dips below key support levels.

Interested in the future of Ethereum? This article dives into the potential impact of Ethereum ETFs on the cryptocurrency market:
Ether ETFs to Oppose Bitcoin Dominance: Is the Flippening Near?

Exciting news for Ethereum fans! This article discusses BlackRock’s recent filing to launch their Ethereum ETF:
BlackRock Files Updated ETH ETF Proposal: Here’s What’s New