Markets
Will Today’s $6.6 Billion Bitcoin Options Expiration Send Markets Down?
This Friday, approximately 107,000 Bitcoin options contracts will expire, with a notional value of $6.6 billion.
Additionally, this is an end-of-month expiration event, which is much larger than usual weekend expirations so there might be some slight market volatility.
Bitcoin Options Expiration
The current huge tranche of BTC derivatives has a put/call ratio of 0.5, meaning that twice as many long (call) contracts expire as short (put) contracts. The maximum pain point, or the price at which most losses will be incurred, is $57,000, about $4,000 below current spot prices.
Bulls remain in charge of the Bitcoin options markets with over $340 million in open interest at higher strike prices of $70,000, $75,000 and $80,000. Additionally, the total OI reaches $590 million at $90,000 and $770 million at the strike price of $100,000, according to in Deribit.
Crypto derivatives tool provider Greeks Live said June was a tough month for the crypto market, “with a more pessimistic mood as BTC and ETH prices at one point approached the maximum pain point, which investors thought was unreachable.”
He added that despite market volatility, implied volatility, a measure of future volatility of expiring contracts, has not shown a significant increase, with BTC below 50% IV for all major terms.
In addition to the large batch of Bitcoin options, about a million Ethereum options are expiring today. These have a put/call ratio of 0.59, a maximum hot spot of $3,100, and a notional value of $3.6 billion. This has pushed the total expiring notional value of crypto options to over $10 billion.
Ethereum ETF News This will be clearer early next month, observed Greeks Live, which added that implied volatility “will be under strong downward pressure for a few days after today’s delivery.”
Impact on the crypto market
Total market capitalization has recovered somewhat from its decline earlier this week to hover around the $2.4 trillion mark. However, sentiment remains bearish and markets have been trending lower throughout June.
Bitcoin recovered to reach $62,000 on June 28, but has retreated to $61,500 at the time of writing. The asset seems to be consolidating at this level following its dip below $60,000 on June 24.
Ethereum prices had also recovered from their five-week low of $3,260 on Monday. The asset was back to $3,430 at the time of writing.