How Will Expiration of $2 Billion in Bitcoin and Ethereum Options Impact Crypto Markets?

Brief:

•18,000 BTC and 270,000 ETH options contracts expiring on April 5th.

•The total value of these expiring options contracts exceeds $2 billion.

•Options traders are becoming increasingly bearish as BTC falls below $70,000.

The market is paying attention to the price volatility and impact of the upcoming expiration of Bitcoin (BTC) and Ethereum (ETH) options contracts. With more than $2 billion in Bitcoin and Ethereum options contracts set to expire on April 5, the market is focused on the price volatility and impact of the two largest cryptocurrencies by market capitalization.

It is reported that the nominal values ​​of Bitcoin and Ethereum options contracts are US$1.2 billion and US$890 million respectively.

Will this expiration trigger increased market volatility and impact the prices of the two largest cryptocurrencies by market capitalization?

Shorts Dominate Cryptocurrency Options Market

Options traders are becoming increasingly bearish as Bitcoin prices fall below $70,000. Options allow traders to buy or sell an asset at a specific price on a specific date, a feature that provides flexibility to the holder. Unlike futures, options holders are under no obligation to buy or sell.

According to data from Greeks.live, Bitcoin’s put/call ratio is currently 0.64, and the maximum pain point price is $68,000, which means that this price may cause the largest number of holders to suffer significant financial losses. Likewise, Ethereum has a put/call ratio of 0.8 and its maximum pain point is $3,400.

Bitcoin Put Ratio | Source: Greeks.live

Analysts pointed out that the crypto market had a weak week, with the $70,000 mark ending in victory for short-term short sellers, while selling call options became the top trade of the week, with implied volatility (IVs) across all major tenors. dropped significantly.

This week has been quite rough for Bitcoin, with the price failing to stay above $70,000 and falling below $65,000. As of now, Bitcoin is trading at around $67,500.

Ethereum has shown similar dynamics, with the price falling below $3,250 earlier this week. In addition, analysts said that Bitcoin has received emotional support after the halving, while other cryptocurrencies have entered a short-term bear market, ETF inflows have also slowed recently, and the market is digesting the premium of ETFs.

Market performance on many contract expiration dates is difficult to predict, especially if there are events that affect the background of the news. Nonetheless, traders must monitor market conditions closely to ensure that increased volatility does not lead to unexpected stop-loss orders or poor trading decisions.

However, market participants should remember that the impact of option expiration on the price of the underlying asset is short-term.

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