Markets
Will today’s $6.6 billion large Bitcoin options expiration cause markets to pull back?
This Friday, around 107,000 Bitcoin options contracts will expire, with a nominal value of $6.6 billion.
Additionally, it is an end-of-month expiration event, which is much larger than normal. weekend salaries therefore, there may be some volatility in the market.
Bitcoin Options Expiration
The current massive tranche of BTC derivatives has a put/call ratio of 0.5, meaning twice as many long (call) contracts are expiring as short (put) contracts. The maximum pain point, or price at which most losses will occur, is $57,000, which is about $4,000 lower than current spot prices.
Bulls remain in command of the Bitcoin options markets with over $340 million in open interest at higher strike prices of $70,000, $75,000 and $80,000. Furthermore, the total OI rises to US$590 million at US$90 thousand and US$770 million at the exercise price of US$100 thousand, according to for Deribit.
Crypto derivatives tool provider Greeks Live commented that June was a tough month for the crypto market, “with a more bearish atmosphere as BTC and ETH prices reached a pain point that investors thought was impossible to reach.”
It added that despite market volatility, implied volatility, a measure of the future volatility of expiring contracts, did not show a significant increase, with BTC below 50% IV for all key terms.
In addition to the large batch of Bitcoin options, about a million Ethereum options expire today. They have a put/call ratio of 0.59, a maximum pain point of $3,100, and a notional value of $3.6 billion. This brings the total notional value of crypto options expiring to over $10 billion.
Ethereum ETF News will become clearer early next month, noted Greeks Live, which added that implied volatility “will be under strong downward pressure for a few days after today’s delivery.”
Impact of the cryptocurrency market
Total market capitalization has recovered somewhat from its dip earlier this week, hovering around the $2.4 trillion mark. However, sentiment remains bearish and markets have been trending downwards throughout June.
Bitcoin recovered to a high of $62,000 on June 28, but has retreated to $61,500 at the time of writing. The asset appears to be consolidating at this level after its fall below US$60 thousand on June 24th.
Ethereum prices also recovered from their five-week low of $3,260 on Monday. The asset had returned to $3,430 at the time of writing.