Markets
How will crypto markets react to the massive $4.7 billion Bitcoin options expiration today?
Crypto markets declined slightly this week as sentiment weakened following the U.S. Securities and Exchange Commission’s approval last week of Ethereum spot exchange-traded funds.
Still, volatility could increase when a whopping $4.7 billion worth of Bitcoin options contracts worth a notional value expire on May 31.
The contract expiration of 69,200 is huge compared to the last few weeks event, as month-end derivatives activities generally are, according to in Déribit.
Bitcoin Options Expiration
The put/call ratio for this tranche of Bitcoin options is 0.61. This means that there are more calls (or long contracts) expiring than puts (or short sales). The point at which most losses will be recorded, called the maximum pain point, is around $65,000, or $3,500 below current spot prices.
There are many open interests, or contracts that have not yet expired, on long positions, including strike prices of $70,000, $75,000, $80,000 and even $100,000, where the OI is $886 million.
On the short side, the $60,000 strike price presents the largest OI at $519 million. This suggests that derivatives traders remain bullish on Bitcoin and expect higher prices.
The total notional value of OI for all outstanding BTC options contracts is $19 billion.
In addition to the current large batch of Bitcoin options, there are approximately $3.7 billion worth of Ethereum contracts with a notional value expiring. The 910,000 contracts have a put/call ratio of 0.84 with more balanced long and short sellers than for BTC contracts.
Additionally, aggregate open interest in Ethereum futures hovered near record highs this week, at around $17 billion, due to speculation around the ETF’s spot move.
Crypto Market Outlook
Cash markets rarely react to options expiration events, but today’s is a major problem. Total capitalization remained relatively stable that day, at $2.68 trillion. In fact, crypto markets have moved very little over the last 12 days or so.
Bitcoin edged up 1.2% on the day to trade at $68,489 at the time of writing, while Ethereum was down slightly at $3,751.
Altcoins were mostly still in the red, adding to their decline over the past few days, and meme coins were taking a particularly strong turn. bigger hits.
SPECIAL OFFER (Sponsored)
Free Binance $600 (CryptoPotato Exclusive): Use this link to create a new account and receive an exclusive $600 welcome offer on Binance (all the details).
LIMITED OFFER 2024 at BYDFi Exchange: Up to $2,888 Welcome Reward, use this link to register and open a position of 100 USDT-M for free!