Bitcoin and Ethereum Options Expiry Could Influence Short-Term Price Movements Amid Bearish Market Sentiment

• Today, over $3.3 billion worth of Bitcoin (BTC) and Ethereum (ETH) options contracts will expire, potentially leading to significant market fluctuations.

• Data indicates Bitcoin’s max pain price sits at $104,000, while Ethereum’s stands at $2,450, implying a possible downward price trend.

• Despite the bearish options sentiment, analysts remain optimistic about the long-term prospects for BTC and ETH.

Today’s expiration of over $3.3 billion in crypto options could lead to short-term volatility for Bitcoin and Ethereum, keeping traders on alert.

Bitcoin and Ethereum Options Expiry: Key Insights for Traders

According to data from Deribit, today’s expiring options amount to an impressive notional value of $2.8 billion, with open interest currently at 25,438 contracts. This marks a slight decline from the previous week, which had 26,543 contracts.

The data reveals that out of the total contracts, 11,435 are call options while 14,004 are put options, yielding a put-to-call ratio of 1.22. This trend indicates a prevailing bearish sentiment among traders, who appear to anticipate downward price movements or are securing positions against such moves.

The bearish sentiment is mirrored in the Ethereum market, where the put-to-call ratio stands at 1.27. The notional value of the 201,167 expiring contracts exceeds $542 million, comprised of 112,565 put contracts and 88,602 call contracts. This indicates a decrease from last week’s total of 219,986 contracts.

Interestingly, both Bitcoin and Ethereum’s maximum pain prices are lower than their current trading prices. According to the Max Pain theory, markets often gravitate toward these levels as expiration approaches, leading to a potential scenario where higher numbers of options contracts expire worthless.

As of the time of writing, Bitcoin’s max pain price is $104,000. This is in contrast to its trading price of $110,787, following a recent all-time high of $111,917. The cryptocurrency has experienced a slight dip of about 1.0% since its peak.

Analysts from Greek.live suggest that a short-term correction of 15-20% could be on the horizon, as many traders are opting for downside protection via put options, predicting a brief retreat to the $100,000–$103,000 range. However, the overall sentiment remains bullish, with many in the market anticipating Bitcoin will continue its upward trend.

Interestingly, funding rates reflect ongoing market skepticism, with numerous participants choosing to short BTC, which could instigate a short squeeze and potentially elevate prices further.

According to their analysis, significant price levels to monitor include $110,000 as immediate support, $120,000 for near-term targets, and $150,000-200,000 as long-term outlooks.

For Ethereum, the max pain price is noted at $2,450. Despite trading at $2,693—a 2.6% increase from the previous day—market dynamics suggest possible movements toward this max pain level as expirations loom.

As highlighted by Greek.live, Ethereum has lagged relative to Bitcoin, failing to follow in Bitcoin’s footsteps toward its all-time high, with many expecting ETH to reach $3,000 by June.

While traders should brace for potential short-term volatility due to the expiration of these options, it’s essential to note that markets typically stabilize relatively quickly as participants recalibrate to new price levels.

Conclusion

In summary, the upcoming expiration of options contracts carries the potential for short-lived price swings in both Bitcoin and Ethereum. However, despite prevailing bearish sentiments in options markets, many traders remain optimistic about the long-term prospects for both cryptocurrencies. Keeping an eye on max pain prices and market sentiment will be crucial for traders navigating this dynamic environment.