- Bitcoin and altcoins have seen a rise following the below-expectation US CPI. Today is critical for the leading two cryptocurrencies, Bitcoin and Ethereum, as $2.1 billion worth of options are set to expire.
- This expiration of crypto options contracts, particularly after the cold US CPI, is of special interest. But how will this development affect the prices of cryptocurrencies and the broader market?
- Today, approximately $1.18 million will expire in 18,183 Bitcoin option contracts. This slice is very similar to the 18,359 contracts made last week. Deribit data shows that Bitcoin’s put-to-call ratio is 0.62, indicating that call options are more common than put options.
Today is a critical day for Bitcoin and Ethereum as $2.1 billion worth of options are set to expire. This article explores the potential impact on the cryptocurrency market.
Expiration of BTC and ETH options: What are the maximum pain points?
Deribit data also reveals that Bitcoin’s maximum pain point is $63,000. The maximum pain point is the price that would cause financial losses for the most number of owners. In addition to Bitcoin options, 321,925 Ethereum contracts will also expire today. The nominal value of these expiring contracts is over $940 million, with a put-to-call ratio of 0.27 and a pain point of $3,000.
Effects of expiring options on crypto prices
Greeks.live, a tool provider for crypto option traders, shared its perspective on the options contracts expiring today. It evaluated the impact of the announcement of US inflation data on the crypto options market. The options market reacted significantly, with all major futures (implied volatilities) IVs quickly rising to the highest levels of the month. This recent sideways market caused major futures option IVs to drop to new lows at one point this year, making them extremely cost-effective for buyers, worth buying for every new event driver.
Long-term options are leaning towards the bull side
According to CF Benchmarks analysts, the fact that the implied volatility of unpaid (OTM) put options is higher than call options indicates that derivative traders are paying high premiums for OTM put options. This signals a short-term market sentiment as traders are hedging against a possible decline in Bitcoin’s value. In contrast to the short-term view, analysts note that there is a “flatter” volatility curve for longer-term put and call trades, with a slight slope towards call trades. This suggests that investors are more optimistic about Bitcoin’s long-term expectations.
Conclusion
Today’s expiration of Bitcoin and Ethereum options could lead to sharp price movements, although this effect is usually temporary. The market typically balances the next day, compensating for initial fluctuations. However, investors should carefully analyze technical indicators and market sentiment before investing in this volatile environment. It will be interesting to see whether this skew towards calls will increase following the positive CPI report and rising disinflation expectations.
