Bitcoin (BTC) Options Worth $1.1B Expiring Today: Potential Impact on Crypto Market Surge

• Despite a minor mid-week dip, crypto markets have been relatively inactive in the past several days and continue to trade sideways.
• Around 18,280 Bitcoin options contracts are set to expire on May 10, which may inject some volatility.
• The notional value for this week’s batch of expiring BTC contracts is around $1.15 billion, according to Deribit.

Bitcoin options contracts worth $1.15 billion are set to expire, potentially injecting volatility into the crypto markets. This article provides an in-depth analysis of the potential impact on the market.

Bitcoin Options Expiry

The put/call ratio for this week’s BTC options is 0.64, which means that more calls, or long contracts, are expiring than puts or shorts. The longs are also dominating in open interest (OI) with almost $700 million at the $70,000 and $100,000 strike prices. Open interest refers to the number or value of contracts that have yet to be settled.

Open Interest and Trader Sentiment

OI for put contracts is also starting to creep up with around $360 million at the $50,000 strike price, according to Deribit. Overall, the open interest for Bitcoin call options is more than double the OI for put options, indicating bullish trader sentiment. Call options give the right to purchase the underlying asset at a predetermined price on or before a specific date. Moreover, trading firms like QCP Capital and Paradigm have observed revived demand for upside call options, including buyers closing existing positions to roll into higher strike calls expiring in July and September.

Ethereum Contracts Expiry

In addition to today’s batch of Bitcoin options, 276,000 Ethereum contracts are also set to expire. These have a notional value of around $840 million and a put/call ratio of 0.74. There is a lot of OI, around $636 million, at the $3,600 strike price, indicating that Ethereum derivatives traders are also bullish.

Crypto Market Outlook

Crypto markets have gained 2.1% on the day to reach $2.45 trillion in total capitalization. However, they have consolidated around this level since mid-April with very little movement in either direction. Bitcoin dipped below $61,000 on May 9 but has recovered to tap $63,000 during the Friday morning Asian trading session. The asset has been down trending since its all-time high in mid-March and has lost 15% since then. Ethereum prices hit an intraday low of $2,953 but have since recovered to reach $3,032 at the time of writing.

Conclusion

With the upcoming expiry of Bitcoin and Ethereum options contracts, the crypto market could see some volatility. However, the overall sentiment remains bullish, with open interest for call options significantly outweighing put options. The market will be closely watching the impact of these expiries on the overall market dynamics.