Bitcoin and altcoins soared after the US CPI came in below expectations. Today is critical for the two leading cryptocurrencies. Because $2.1 billion worth of Bitcoin and Ethereum options are expiring. The expiration of these cryptocurrency option contracts is particularly interesting as it comes after the cold US CPI. But how will the development affect the prices of cryptocurrencies and the broader market?
BTC and ETH options expire: What are their maximum pain points?
About $1.18 million in 18,183 Bitcoin options contracts expire today. This tranche is very similar to last week’s 18,359 contracts. Deribit data shows that Bitcoin’s put-to-call ratio is 0.62. This figure shows that call options (calls) are more common than put options (puts). Furthermore, the data reveals that Bitcoin’s maximum pain point is $63,000. The maximum pain point is the price at which the asset will cause financial losses for the largest number of holders.
In addition to Bitcoin options, 321,925 Ethereum contracts expire today. These expiring contracts have a notional value of over $940 million, a put-to-call ratio of 0.27 and a pain point of $3,000.
Expiring options and their impact on cryptocurrencies prices
Greeks.live, a tool provider for crypto options traders, shared its perspective on options contracts expiring today. It assessed the impact of the release of US inflation data on the crypto options market. On the subject, Greeks.live underlined the following points:
The options market reacted significantly with all major futures (implied volatilities) IVs quickly hitting new monthly highs, and the recent sideways market has caused major futures options IVs to fall to new lows at some point this year, thus making them extremely cost-effective for buyers, with each new event driver worth buying options for.
Although option expiries can cause sharp price movements, this effect is usually temporary. The market usually stabilizes the next day, compensating for the initial fluctuations. However, traders should carefully analyze technical indicators and market sentiment before trading in this volatile environment.
Long-term options lean towards the bullish side
According to CF Benchmarks analysts, the higher implied volatility of out-of-the-money (OTM) put options compared to call options suggests that derivatives traders are paying higher premiums for OTM put options. This indicates a short-term market sentiment. This is because traders are hedging against a possible drop in Bitcoin’s value.
In contrast to the short-term outlook, analysts note a “flatter” volatility curve for longer-term put and call trades, with a slight tilt towards calls. This suggests that investors are more optimistic about Bitcoin’s long-term prospects. As you have been following on Kriptokoin.com, disinflation expectations have risen after the positive CPI report. So it will be interesting to see if this skew towards calls will increase.
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