Markets
Bitcoin and Ether Options Worth $10 Billion Set to Expire Friday
It’s that time again where discussions about activity in crypto derivatives take priority.
Friday at 08:00 UTC, Bitcoin (BTC) options worth $6.68 billion and ether (ETH) options worth $3.5 billion are set to expire on leading crypto derivatives exchange Deribit.
The imminent expiration, which represents more than 40% of current cumulative open interest, or more than $23 billion, could trigger a surge in volatility in the markets. Large quarterly expirations often lead to increased volatility, making prices more unpredictable due to higher trading volumes and closing/rolling over positions.
“As we approach the big quarterly expiration on Friday, potentially influenced by “quadruple witchcraft“Due to the volatility of the US stock markets, more than 25% of Deribit’s open positions are expected to expire in-the-money, equivalent to more than $2.7 billion. The total notional size of expiration is over $10 billion,” Luuk Strijers, CEO of Deribit, told Coindesk in an interview.
Options are derivative contracts that give the holder the right but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call gives the right to buy, while a put offers the right to sell. On Deribit, an options contract represents one BTC or one ETH.
The fact that over 25% of open interest expires in the money means that a significant number of derivative contracts should be profitable for their holders at expiration.
Bitcoin, the leading cryptocurrency by market value, has fallen nearly 9% this month, testing bargain hunters below $60,000 at one point. As usual, the sell-off weighed on the entire market, sending ether down almost 10%.
“The recent price drop was caused by miner sales, some pressure from Germany’s seized BTC, and of course the impending Mt. Gox coin transfer expected in early July,” Strijers said.
Nonetheless, call and put biases show that investors are willing to pay a higher premium for short- and long-term calls offering asymmetric upside potential than for puts, according to tracked data by Amberdata.
“While short-term bearish sentiment is evident, traders expect a positive move for bitcoin by July 12 and for ETH by July 5, due to options bias. Trading on the ETH ETF is expected to begin during the first week of July,” Strijers noted. .