Market Volatility Anticipated as $5 Billion Worth of Bitcoin and Ethereum Options Expire
Market volatility is expected in the cryptocurrency market as over $5 billion worth of Bitcoin and Ethereum options are set to expire today. Among the total, Bitcoin contracts account for $4.25 billion, while Ethereum contracts make up $1.01 billion. Analysts predict that these expirations could lead to significant price fluctuations, particularly around the maximum pain points, which are the levels where the largest volume of options expire worthless.
As the expiration date approaches, Deribit, a leading cryptocurrency exchange, reports that 62,657 Bitcoin contracts will be liquidated. This data reveals a put-to-call ratio of 0.66 and a maximum pain point of $64,000. Additionally, 403,426 Ethereum contracts are set to expire, with a put-to-call ratio of 0.97 and a pain point of $2,600.
The put-to-call ratio serves as an indicator of market sentiment. In the case of Bitcoin, the current ratio suggests a bullish bias, as the cryptocurrency is currently trading above its pain point at $67,962. On the other hand, Ethereum shows a more cautious outlook, as it is trading below its critical point at $2,490.
The Max Pain theory suggests that as the expiration date approaches, prices tend to gravitate towards these pain points. If conditions persist, this could lead to a potential drop in Bitcoin’s price and a rise in Ethereum’s price. However, the pressure on these major cryptocurrencies should subside after Deribit’s contract liquidation at 08:00 UTC.
Compared to previous weeks, the volume of options expiring today is significantly higher. Previous expiration ranges were between $1.4 billion and $1.62 billion. This increase not only reflects the market’s expansion but also the growing interest in these derivatives.
Bitcoin and Ethereum options expiring around this date are exhibiting higher volatility, with Bitcoin being more sensitive to macroeconomic events. As of now, Bitcoin’s price stands at $68,117.30, representing a 1.3% increase over the past 24 hours.
Disclaimer: The views and opinions expressed in this article, by the author or anyone mentioned, are solely for informational purposes and do not constitute financial, investment, or any other form of advice. Investing or trading cryptocurrencies carries a risk of financial loss.