Markets
Will Crypto Markets Rise as $1.4 Billion Bitcoin Options Expiry?
Crypto markets largely held on to their gains this week, buoyed by Ethereum and the U.S. Securities and Exchange Commission’s approval of spot exchange-traded funds.
However, approximately $1.4 billion worth of Bitcoin options contracts in notional value will expire on May 24.
The expiration of the contract of 21,000 people is relatively low event compared to the end of the month expiration on May 31, which will see the expiration of options worth a whopping $4.3 billion, according to in Déribit.
Bitcoin Options Expiration
The put/call ratio for this week’s Bitcoin options contracts is 0.88, meaning sellers of long and short contracts are relatively balanced with slightly more calls expiring. The maximum pain point, or the price at which most options contract buyers lose their premium, is $67,000.
Long positions also dominate in Open Interest (OI) with around $830 million at the $70,000 strike price. Higher strike prices also feature a lot of OI, with around $843 million at $100,000, according to Deribit.
The $60,000 strike price has the highest OI amount for put contracts at $388 million. Open interest refers to the number or value of contracts that have not yet settled, so bulls expect much higher BTC prices.
Bitcoin OI before expiration. Source: Déribit
In addition to current Bitcoin options, approximately 354,000 Ethereum contracts expire 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 as the long-awaited SEC deadline. There is approximately $515 million in OI at the $4,000 strike price as bulls expect more momentum.
“BTC has 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 50%” , commented Crypto derivatives software provider Greeks Live.
Impact on the crypto market
Nearly $3 billion worth of BTC and ETH options will expire today, but the impact on spot markets is generally muted. Total capitalization fell 1.3% to $2.68 trillion, mainly due to a 2.3% decline Bitcoin Prices as the asset has fallen to $67,400 at the time of writing.
Ethereum faced tons of volatility before yesterday’s decision, but now sits calmly at $3,730.
Altcoins were mixed with gains for Chainlink (LINK), PEPE and Ethereum Classic (ETC), but losses for Solana (SOL), Dogecoin (DOGE) and Toncoin (TON).