In the cryptocurrency market, $3.98 billion worth of Bitcoin and Ethereum options contracts will expire today. This enormous amount could affect short-term price action, especially since both assets have been on a recent downtrend. Therefore, investors are preparing for potential volatility.
Huge cryptocurrency options are expiring: Prepare for volatility!
As you follow from Kriptokoin.com, the market has declined today, with exceptions. In the middle of this decline, there is a huge option expiry. According to Deribit data, Bitcoin options expiry stands at 38,566 contracts, compared to 48,794 contracts last week. Similarly, Ethereum’s expiring options fell to 189,018 contracts from 294,380 contracts the previous week.
For Bitcoin, the maximum pain price of expiring options is $79,500. Moreover, the put/call ratio is 0.85. This suggests that the asset is generally bullish despite its recent pullback. In contrast, the maximum bitter price of Ethereum counterparts is $3,000. Furthermore, the put/call ratio is 0.92. This reflects a similar market outlook to the leading cryptocurrency Bitcoin.
Caution: The market can be very volatile!
The maximum pain point is a very important metric that often drives market behaviour. It represents the price level at which most options become worthless, inflicting maximum financial ‘pain’ on traders. Meanwhile, put/call ratios below 1 for both Bitcoin and Ethereum signal optimism in the market, with more traders betting on price increases. Put options represent bets on price declines. Call options represent bets on price increases. Taken together, this metric (put/call ratio) measures market sentiment.
Option expiries often lead to short-term price fluctuations. Thus, traders and investors need to be prepared for volatility, as it creates uncertainty in the market. Crypto influencer Wise Advice warns, ‘The market can be very volatile. Therefore, trade with caution,’ he warns.
More waves with year-end cryptocurrency options expiry!
With the markets still optimistic, the general opinion is that Bitcoin’s upside potential continues. Some analysts predict that BTC will reach $ 100,000 before the end of the year. However, bigger issues lie ahead, with many cryptocurrency options set to expire at the end of the month and potentially even more (around $11.8 billion for BTC) on 27 December. These dates are important given that Bitcoin bull runs tend to end exactly at the end of the year, between November and December.
It is possible that the expiration of these Bitcoin options at the end of the year could be an important catalyst. It is likely to influence immediate price movements as well as the trajectory towards the new year, 2025. Bulls see this as a unique opportunity to enter the region beyond $100,000. However, bears are committed to limiting cryptocurrency price discovery to protect their position. Greeks.live makes the following assessment:
Looking at the options market, the market is clearly polarised and trading is very fragmented, with some big traders going long into the sky, while more traders are currently on the short side of the market.
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