- Bitcoin and Ethereum options worth $1.4 billion and $1 billion respectively are set to expire soon, according to data from Greeks.live.
- The “max pain” point for Bitcoin options is estimated to be around $61,000, while for Ethereum options it stands at $3,000.
- The market has turned bearish due to massive Bitcoin exchange-traded fund outflows and the implied volatility of all major terms continues to decline.
Bitcoin and Ethereum options worth billions are set to expire, with the market turning bearish due to massive Bitcoin ETF outflows. This article explores the implications of these developments on the crypto market.
Bitcoin and Ethereum Options Expiry
According to data provided by Greeks.live, 23,000 Bitcoin options and 330,000 Ethereum options are close to expiring. The notional value of these Bitcoin and Ethereum options stands at $1.4 billion and $1 billion respectively. The put-call ratio for Bitcoin options is 0.49, while for Ethereum options it is 0.36.
“Max Pain” Point and Market Implications
The “max pain” point for Bitcoin options is estimated to be around $61,000, which means that this specific strike price has the biggest number of puts and calls. Market participants on both sides of the trade would face the biggest losses at this price level. The “max pain” point for Ethereum options currently stands at $3,000. The “maximum pain” theory suggests that the price of an option tends to move closer to the price point with the most open options contracts, causing the maximum number of puts and calls to expire worthless. It is worth noting that only a small number of options (roughly 10%) tend to be exercised.
Market Turns Bearish Due to Bitcoin ETF Outflows
As noted by Greeks.live, the market has turned bearish due to massive Bitcoin exchange-traded fund outflows. Newly launched Hong Kong-based ETFs have failed to offset these massive outflows. As a result, the implied volatility (IV) of all major terms has continued to decline, now on par with the winter bull market. According to CoinGlass, the total Bitcoin options interest stands at $17.6 billion, with Deribit accounting for the vast majority of the sum. As for Ethereum, the total options interest is at $7.6 billion.
Conclusion
The impending expiry of Bitcoin and Ethereum options worth billions, coupled with the bearish market trend due to Bitcoin ETF outflows, could lead to significant market volatility. Investors and traders should keep a close eye on these developments to make informed decisions. As the crypto market continues to evolve, such events underscore the importance of understanding the dynamics of options trading and market sentiment.
