The cryptocurrency market will watch the expiration of the $2.62 billion Bitcoin and Ethereum option contract today. In particular, both assets have declined recently. Therefore, this major expiry is likely to affect short-term price movements. Bitcoin options to expire are worth $2.02 billion. In addition, Ethereum options worth $598.99 million are expiring.
Investors are nervous, they are closely following this expiry!’
As you have followed from Kriptokoin.com, the market suddenly turned into a bloodbath as Bitcoin lost altitude. Options expiring today point to a slight decline compared to last week. According to Deribit data, Bitcoin options expire at 20,728 contracts, compared to 20,815 contracts last week. Similarly, Ethereum’s expiring options increased to 174,863 contracts from 164,330 contracts in the previous week.
For Bitcoin, the maximum pain price of expiring options is $110,000. Moreover, the put/call ratio is 0.87. This suggests that the asset is generally bullish despite its recent pullback. In contrast, the maximum bitter price of Ethereum counterparts is $3,700. Moreover, the put/call ratio is 0.48. This reflects a similar market outlook to the leading cryptocurrency.
What does the options situation mean for both cryptocurrency projects?
The maximum pain point is a very important metric that often drives market behaviour. It represents the price level at which most options expire worthless. In addition, put/call ratios below 1 for both Bitcoin and Ethereum signal optimism in the market, with more traders betting on price increases. However, with this volume of expiring options, traders and investors need to be prepared for potential volatility. In this context, an analyst shared the following assessment:
The expiration of options may lead to increased volatility as traders adjust their positions. Watch for potential movements in SPX and BTC as they may react to these market dynamics.
Can options expiry catalyse a market recovery?
It is noteworthy that these expiring options came after Bitcoin fell to $94,235. At the time of writing, the leading cryptocurrency was trading at $96,860, down 4.6% on a daily basis. Bitcoin, whose maximum pain point is $ 101,000, stands well below its strike price. Ethereum, on the other hand, is trading at $3,392, well below its maximum pain price of $3,700. Based on the Max Pain theory, BTC and ETH prices are likely to approach their respective strike prices and hence volatility is expected.
This is because the max pain theory in options trading is based on the assumption that options writers are usually large institutions or professional traders. They therefore have the resources to drive the closing price towards the maximum pain point on the expiry day. For Bitcoin, this therefore means a possible rebound. So it is possible that the leading cryptocurrency could potentially reclaim the $ 100,000 milestone.
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