Markets
Crypto Market Braces for Volatility as $10 Billion in Bitcoin and Ether Options Set to Expire
Cryptocurrency Market Braces for Volatility as $10 Billion in Bitcoin and Ether Options Set to Expire
Bitcoin (BTC) options worth US$6.68 billion and Ethereum (ETH) Options worth $3.5 billion are scheduled to expire on Deribit, the leading crypto derivatives exchange, this Friday at 8am UTC. This imminent expiration represents more than 40% of the current accumulated open interest, which amounts to more than 23 billion dollars. These large quarterly expiries often lead to greater market volatility, as increased trading volumes and reversal or renewal of positions make prices more unpredictable.
“As we approach Friday’s big quarterly expiration, potentially influenced by ‘quadruple witching’ and related volatility in US equity markets, more than 25% of Deribit’s open interest is expected to expire in the money, equating to more than US$2.7 billion. The total notional maturity size is more than US$10 billion”, according to to Luuk Strijers, CEO of Deribit.
Having more than 25% of open interest set to expire in the money suggests that a significant number of derivative contracts are expected to be profitable for their holders upon expiration. Bitcoin, the leading cryptocurrency by market value, has fallen nearly 9% this month, testing levels below $60,000, attracting bargain hunters. As usual, this sell-off impacted the broader market, pulling Ether down by almost 10%.
Despite the current bearish sentiment, data from Amberdata indicates that investors are willing to pay a higher premium for short- and long-term call options, which offer asymmetric advantages, compared to puts. This suggests that traders are anticipating a positive change in the market. BTC is currently trading at $60,958, down 2.24% in the last 24 hours, while ETH is down 1.14% and hovers around $3,375.