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Will The Upcoming Bitcoin Options Expiry Quash the Crypto Rally?

Recently, traders in derivatives have preferred Ethereum options over Bitcoin options. As a result, around 260,500 contracts for ETH options are going to expire. There are just 30,500 contracts worth of Bitcoin options that are about to expire. Furthermore, when options and futures expire, the market is frequently volatile. Markets for cryptocurrencies have recently been on the rise and are probably poised for a correction.

Derivative contracts called bitcoin options let traders bet on the price of bitcoin. They let speculators to purchase or sell Bitcoin at a set price, known as the strike price, at a predetermined expiration date. They are also more adaptable than futures, which have set expiration dates.

Greeks.live reports that the put/call ratio on Bitcoin options is 0.99. Furthermore, they have a notional value of $0.93 billion and a maximum pain price of $29,000.  The number of traded put (short) contracts divided by the number of traded call (long) contracts yields the put/call ratio. As more traders are purchasing long contracts than short ones, a number lower than 1 is bullish. Bulls and bears are currently quite evenly split in the ratio.

The strike price with the most active contracts is referred to as the maximum pain price. Additionally, it is the price at which the asset would result in monetary losses for the most contract holders upon expiration.

The maximum pain price for the Ethereum options is $1,850, and they have a put/call ratio of 0.83 and a notional value of $5.5 billion. This means that traders of Ethereum derivatives might expect a little more positive future. Following the successful Shapella upgrade on April 12, Ethereum has risen sharply today. At the time of writing, ETH is up 10.3% on the day and has reached an eleven-month high of $2,114.

Since May 2022, the cryptocurrency market capitalisation has never been higher. According to CoinGecko, the amount has now hit $1.33 trillion. This time, BTC has not been in the  driver’s seat as it has only increased by 2% for the day. At the time of writing, the asset’s price was $30,773.

The neutral options ratios imply that when they expire, there won’t be a significant effect on markets. But a fall from the market’s eleven-month peak may be coming shortly.

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.