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Can markets recover after $2 billion in cryptocurrency options contracts expire today?
On Friday, July 12, approximately 23,700 Bitcoin options contracts will be traded with a notional value of approximately $1.49 billion.
The expiration event of options is similar in magnitude to The past few weeks which did not have a significant impact on spot markets.
They have been trending downwards due to selling pressure on BTC from miners, German governmentand redeem Mt. Gox.
Bitcoin Options Expiration
Today’s BTC derivatives lot has a put/call ratio of 1.08, which means that longs and shorts are very evenly distributed and that bulls and bears are matched. The point where most losses will occur, or the point of maximum pain, is $58,500, which is a bit higher than current spot prices.
However, there is still approximately $800 million of open interest, or contracts still expiring, at the $100,000 strike price, second at Deribit. There is also a lot of OI at strike prices above $65,000, so derivatives traders remain bullish.
Crypto derivatives tool provider Greeks Live commented that crypto markets have “rebounded modestly” this week, with all major implied volatility terms “sharply retreating to new lows since March.”
Implied volatility (IV) is a measure of volatility derived from future-expiring cryptocurrency derivative contracts.
“Quarterly delivery overlaid with a lot of volatility created a pretty perfect entry point for sellers, and option sellers have added significantly to their positions this week, which has been an impetus to push major futures IVs lower,” he added.
In addition to today’s Bitcoin options, there are 157,000 Ethereum options expiring with a notional value of $490 million. These have a put/call ratio of 0.37 and a maximum pain point of $3,100.
Cryptocurrency Market Outlook
Market sentiment is not optimistic, Greeks Live noted. Total cryptocurrency capitalization fell slightly in the past 24 hours to $2.22 trillion, remaining at levels not seen since late February before the rally.
Bitcoin Fails to Gain Momentum over $58,000 and fell below $57,000 in Asian trading on Friday, before recovering slightly.
Ethereum attempted to reach $3,200 but failed and had dropped below $3,100 at the time of writing.
“With US stocks weaker today, the entire risk market is counting on a September rate cut to come to the rescue,” Greeks Live commented.