Will Crypto Markets Rise When $1.4B Bitcoin Options Expires?

Crypto markets have largely held on to gains this week, boosted by Ethereum and the US Securities and Exchange Commission’s approval of exchange-traded funds.

However, about $1.4 billion in notional values ​​of Bitcoin options contracts will expire on May 24.

According to Deribit, the expiration of the 21,000 contract is a relatively small event compared to the May 31 expiration at the end of the month, which will see $4.3 billion worth of options expire.

Expiration of Bitcoin Options

The put/call ratio for Bitcoin options contracts this week is 0.88, meaning that long and short sellers are relatively even with slightly more calls expiring. The maximum pain point, or the price at which most option contract buyers lose their premium, is $67,000.

Longs also dominate in open interest (OI) with about $830 million at the $70,000 strike price. Higher strike prices also have a lot of OI, at about $843 million at $100,000, according to Deribit.

The strike price of $60,000 has the highest amount of OI for put contracts at $388 million. Open interest refers to the number or value of contracts yet to be settled, so bulls expect much higher BTC prices.

graphic
Bitcoin OI by Expiry. Source: Deribit

In addition to current Bitcoin options, there are around 354,000 Ethereum contracts expiring today. These have a notional value of $1.5 billion and a put/call ratio of 0.57 with more calls expiring than puts.

Derivatives traders have been speculating on ETH ahead of the expected SEC deadline. There is about $515 million in OI at the $4,000 strike price as touches expect more momentum.

“BTC pulled back as expected against very strong ETH price support, with ETH’s current weekly weighted IV still above 100%, while BTC’s current weekly IV is only of 50%”, he commented Greeks Live crypto derivatives software provider.

Impact of the crypto market

Nearly $3 billion in BTC and ETH options will expire today, but the impact on spot markets is usually muted. Total market capitalization is down 1.3% to $2.68 trillion, mainly due to a 2.3% drop in Bitcoin prices, as the asset fell to $67,400 at the time of write this article.

Ethereum faced tons of volatility before yesterday’s decision, but now sits quietly at $3,730.

Altcoins were a mixed bag with gains for Chainlink (LINK), PEPE, and Ethereum Classic (ETC), but losses for Solana (SOL), Dogecoin (DOGE), and Toncoin (TON).

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