News
Will Cryptocurrency Markets Rise When $1.4 Billion Bitcoin Options Expire?
Cryptocurrency markets have largely held onto gains this week, supported by Ethereum and the U.S. Securities and Exchange Commission’s approval of spot ETFs.
However, approximately $1.4 billion in notional value of Bitcoin options contracts will expire on May 24.
The contract expiry of 21,000 is relatively small event versus the May 31 month-end deadline, which will see a whopping $4.3 billion worth of options expire, second in Deribit.
Bitcoin Options Expiration
The put/call ratio for Bitcoin options contracts this week is 0.88, meaning sellers of long and short contracts are relatively evenly matched with slightly more calls expiring. The maximum tipping point, or the price at which most buyers of options contracts lose their premium, is $67,000.
Longs also dominate in open interest (OI), with about $830 million at the $70,000 strike price. According to Deribit, higher strike prices also mean a lot of OI, with around $843 million at $100,000.
The $60,000 strike price represents the highest OI amount for put contracts at $388 million. Open interest refers to the number or value of contracts that have yet to be settled, so bulls expect much higher BTC prices.
Bitcoin OI by expiry. Source: Deribit
In addition to today’s Bitcoin options, approximately 354,000 Ethereum contracts expire today. These 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 the run-up to deadline long awaited by the SEC. There is approximately $515 million in OI at the $4,000 strike price as bulls expect more momentum.
“BTC retreated as expected, relative to strong support for ETH price, with ETH’s current weighted weekly IV still above 100%, while BTC’s current weekly IV is only 50%.” commented Greeks Live crypto derivatives software provider.
Impact on the cryptocurrency market
Nearly $3 billion in BTC and ETH options will expire today, but the impact on spot markets is usually modest. Total capitalization fell 1.3% to $2.68 trillion, mainly due to a 2.3% decline Bitcoin prices as the asset has fallen to $67,400 as of this writing.
Ethereum faced a lot of volatility before yesterday’s decision, but now sits comfortably 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).