Markets
Crypto market braces for volatility as $10 billion worth of Bitcoin and Ether options set to expire
Crypto market braces for volatility as $10 billion worth of Bitcoin and Ether options set to expire
Bitcoin (BTC) options worth $6.68 billion and Ethereum (ETH) options worth $3.5 billion are set to expire on Deribit, the leading crypto derivatives exchange, this Friday at 8 a.m. UTC. This impending expiration represents over 40% of the current cumulative open interest, which stands at over $23 billion. Such large quarterly deadlines often lead to increased market volatility, as increased trading volumes and the unwinding or rollover of positions make prices more unpredictable.
“As we approach Friday’s important quarterly deadline, potentially influenced by ‘quadruple witchcraft’ and resulting volatility in US equity markets, more than 25% of Deribit’s open interest is expected to expire in-the-money, which equates to more than $2.7 billion. the amount of expiration exceeds 10 billion dollars,” according to to Luuk Strijers, CEO of Deribit.
The fact that more than 25% of open interest expires in-the-money suggests that a significant number of derivative contracts should be profitable for their holders at expiration. Bitcoin, the top cryptocurrency by market value, has fallen nearly 9% this month, testing levels below $60,000, which has attracted bargain hunters. As usual, this massive sell-off impacted the market as a whole, sending ether down almost 10%.
Despite the current bearish sentiment, Amberdata data indicates that investors are willing to pay a higher premium for short- and long-term calls, which offer asymmetric upside potential compared to puts. This suggests that traders are expecting a positive change in the market. BTC is currently trading at $60,958, down 2.24% in the last 24 hours, while ETH is down 1.14% and hovering around $3,375.