Bitcoin broke below $92,000 amid bearish sentiment and cautious investor sentiment. The leading altcoin Ethereum also lost altitude along with BTC. In the process, the global cryptocurrency market capitalization fell to $3.25 trillion. Meanwhile, we are at critical hours in the crypto market, which has the potential to trigger short-term price volatility. Today, $2.27 billion worth of Bitcoin and Ethereum options will expire. This development could create a wave in the market.
Bitcoin and Ethereum investors are preparing for waves!
As you have been following on Kriptokoin.com, the market is on a bearish trajectory. In this environment, volatility is also possible today due to option expiries. According to data on Deribit, 19,364 Bitcoin options expire today. This is slightly lower than last week’s 19,885 BTC contracts. The put/call ratio of the options contracts expiring today is 0.65. Also, the maximum pain point is $97,000. The put/call ratio points to an overall bullish trend, although BTC continues to move away from $100,000.
Meanwhile, 141,185 of the 205,724 Ethereum options expire today. The put/call ratio of the contracts is 0.48. Moreover, the maximum pain point for the cryptocurrency is $3,450. In this context, the expiration of these options could affect the short-term price action of ETH.
What do maximum pain points mean for two cryptocurrency prices?
Options contracts expire today. Therefore, market players expect Bitcoin and Ethereum prices to approach their respective maximum pain points. This suggests that prices will rise as smart money aims to move them towards the “max pain” level. According to the Max Pain theory, option prices tend to gravitate towards strike prices, where the highest number of both call and put contracts are worthless.
The price pressure on BTC and ETH is likely to ease after 11:00 AM PT, when Deribit will process the contracts. However, it is possible that the size of these expiries could lead to increased volatility in the crypto markets. In this context, Deribit posed the question, “Is this a breakout or another consolidation?”
Which direction will the leading cryptocurrency take?
Meanwhile, there are two divergent views among analysts on Bitcoin’s next direction. Some expect further upside. However, others are betting on the downside if support around $92,000 is broken. Elsewhere, Glassnode suggests that short-term demand momentum in the market is weakening. Accordingly, Glassnode shared the following assessment:
Bitcoin short-term demand momentum continued to weaken. An important indicator: Hot Capital (capital revived in the last 7 days) fell 66.7% to $32.0 billion from its peak of $96.2 billion on December 12.
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