Markets
Can markets recover as $2 billion worth of crypto options contracts expire today?
On Friday, July 12, approximately 23,700 Bitcoin options contracts with a nominal value of approximately $1.49 billion will be traded.
The options expiration event is of similar magnitude to last weeks which did not have much impact on spot markets.
They are in a downtrend due to BTC selling pressure from miners, German governmentand Mt. Gox bailouts.
Bitcoin Options Expiration
Today’s BTC derivatives lot has a put/call ratio of 1.08, meaning that longs and shorts are very evenly distributed, and bulls and bears are evenly matched. The point at which most losses will be made, or the maximum pain point, is $58,500, which is slightly higher than current spot prices.
However, there are still about $800 million in open contracts, that is, contracts that have not yet expired, at the strike price of $100,000. according to for Deribit. There is also a lot of OI at strike prices above $65,000, so derivatives traders remain bullish.
Crypto derivatives tools provider Greeks Live commented that crypto markets “recovered modestly” this week, with all major terms implied volatility “retreating sharply to new lows since March.”
Implied volatility (IV) is a measure of volatility derived from cryptocurrency derivatives futures contracts with expected expiration.
“The overlapping quarterly delivery with high volatility created a perfect entry point for bears, and option sellers added heavily to their positions this week, which served as an impetus to depress key term IVs,” he added.
In addition to today’s Bitcoin options, there are 157,000 Ethereum options about to expire with a notional value of $490 million. They have a put/call ratio of 0.37 and a maximum pain point of $3,100.
Cryptocurrency Market Outlook
Market sentiment is not bullish, Greeks Live noted. Total crypto capitalization has fallen slightly in the past 24 hours to $2.22 trillion, remaining at levels not seen since late February, before the rally.
Bitcoin failed to gain momentum above $58,000 and fell below $57,000 during Asian trading on Friday before recovering slightly.
Ethereum attempted to reach $3,200 but failed and fell below $3,100 at the time of writing.
“With US stocks weaker today too, the entire risk asset market is counting on a September rate cut to come to the rescue,” Greeks Live commented.