Markets
Will Crypto Markets Rise When $1.4 Billion Bitcoin Options Expire?
Crypto markets maintained gains this week, driven by Ethereum and the U.S. Securities and Exchange Commission’s approval of spot exchange-traded funds.
However, around $1.4 billion worth of notional value Bitcoin options contacts will expire on May 24.
The contract expiration of 21,000 is a relatively small amount event compared to the month-end expiration on May 31, which will see options expiring worth $4.3 billion, according to for Deribit.
Bitcoin Options Expiration
The put/call ratio for this week’s Bitcoin options contracts is 0.88, meaning sellers of long and short contracts are relatively even, with slightly more options expiring. The maximum pain point, or the price at which most option contract buyers lose their premium, is $67,000.
Longs are also dominating open interest (OI), with around $830 million at the $70,000 strike price. Higher strike prices also have a lot of OI, with about $843 million to $100 thousand, according to Deribit.
The $60,000 strike price has the highest OI value for put contracts at $388 million. Open interest refers to the number or value of contracts that have not yet been settled, so bulls expect much higher BTC prices.
Graphic
Bitcoin OI until expiration. Source: Deribit
In addition to current Bitcoin options, there are around 354,000 Ethereum contracts expiring today. They have a notional value of $1.5 billion and a put/call ratio of 0.57, with more calls expiring than puts.
Derivatives traders have been speculating on ETH in preparation for the long-awaited SEC deadline. There is about $515 million in OI at the $4,000 strike price as bulls expect more momentum.
“BTC has pulled back as expected, compared to strong ETH price support, with ETH’s current weighted weekly IV still exceeding 100%, while BTC’s current weekly IV is only 50%,” commented crypto derivatives software provider Greeks Live.
Impact on the crypto market
Nearly $3 billion worth of BTC and ETH options will expire today, but the impact on spot markets is generally muted. Total capitalization fell 1.3% to $2.68 trillion, mainly due to a 2.3% drop in Bitcoin Prices as the asset has fallen to $67,400 at the time of writing.
Ethereum faced a lot of volatility before yesterday’s decision, but now sits calmly at $3,730.
Altcoins were a mixed bag with gains for Chainlink (LINK), PEPE and Ethereum Classic (ETC), but losses for Solana (SOL), Dogecoin (DOGE) and Toncoin (TON).