Will $2.3B Bitcoin Options Expiry Accelerate Correction?

About 23,400 Bitcoin options contracts will expire on Friday, December 6 in the first December expiration event.

They have a theoretical value of $2.3 billion, which is about a quarter of last month’s massive options expiration event. The year-end event in December is also expected to be very important.

Expiration of Bitcoin Options

This week’s batch of Bitcoin options contracts has a maximum pain point of $97,000 and a put/call ratio of 1.1, meaning that sellers of long (call) and short (put ) match uniformly.

Open interest, or the value or number of options contracts that have not yet expired, is higher at the $100,000 strike price, with $2 billion in OI, but the $120,000 strike price dollars is not far behind, according to Deribit.

“Almost two weeks of options market data has been showing that market makers are more cautious, the impact of 100,000 plus the current pullback so that the short-term IV (implied volatility) rose significantly, the options are very suitable for the short-term play at this time,” noted crypto derivatives provider Greeks Live.

Delivery dates for December 6 options
23,000 BTC options expired with a Put Call ratio of 1.11, a high of $97,000 and a theoretical value of $2.3 billion.
147,000 ETH options expired with a Put Call ratio of 0.62, a high of $3,500 and a notional value of $570 million.
Bitcoin… pic.twitter.com/APzvJ1ohe3

— Greeks.live (@GreeksLive) December 6, 2024

“From a price action perspective, the recovery could be sustained if traders take profits out of their altcoins and turn back to BTC and ETH,” Deribit reported earlier this week before BTC exceeded $100,000.

“With ETH at 1% of its five-month high, this would have the potential to reignite momentum,” he added.

In addition to current Bitcoin options, around 147,000 Ethereum contracts expire today. These have a notional value of $569 million, a maximum pain of $3,500 and a put/call ratio of 0.62, meaning there are almost twice as many expiring calls as puts.

That brings the notional expiration value of Friday’s combined crypto options to about $2.8 billion.

Crypto market outlook

However, crypto markets saw a sharp decline in late trading on December 5, with a total market capitalization of nearly $200 billion down from its all-time high of $3.88 trillion.

The move was fueled by overleveraged Bitcoin markets, causing the asset to fall below $100,000 in a quick fall below $93,000 on December 5. Bitcoin hit an all-time high just below $104,000 yesterday.

However, the asset has since recovered to $98,000 during the Asian trading session on Friday morning.

Crypto option expiration events are unlikely to affect spot markets as much, although leveraged puts certainly do, as evidenced by the large correction.

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