The expiration of options represents one of the most powerful sources of volatility in the cryptocurrency market, and the imminent expiration of massive options is on the horizon.
The impending expiration of 35,000 BTC options and 270,000 ETH options, with notional values of $1.28 billion and $530 million, could exert significant pressure on the cryptocurrency market at a crucial juncture as Bitcoin (BTC) and Ethereum (ETH) options worth $1.58 billion expire, investors brace for potential fluctuations.
The “max pain point” – the price level at which most options expire worthless – currently sits at $36,000 for Bitcoin and $1,900 for Ethereum.
Historically, prices tend to gravitate towards the max pain point as expiration approaches, prompting traders to adjust their positions, potentially leading to increased volatility and a higher number of call options, indicating bullish sentiment among options holders.
However, this ratio also underscores the risk of sharp moves in either direction as options near expiry.
The put/call ratio, at 0.49 for BTC and 0.41 for ETH, signals caution in the market sentiment.
Looking back, significant options expirations have often coincided with increased trading activity and price volatility, as market participants hedge their bets or double down on market expectations.
For example, past expiration periods have at times seen price declines as traders sell underlying assets to manage exposure, while in other instances, rallies ensue if sentiment is bullish enough to absorb selling pressure.
With the expiration of these options, the immediate effects on the market will depend on current sentiment and the positions of market players.
While expiration itself may not dictate long-term price trends, it could serve as a catalyst for short-term price movements. Investors and traders will closely monitor whether the market aligns with historical patterns or charts a new course in response to the current economic landscape.
Disclaimer: The information provided is not financial advice. Chinwa.tech does not take any responsibility for investments made based on the information provided in this article. We recommend consulting a qualified specialist or financial advisor before making any investment decisions.