What the $8.2B expiry of Bitcoin and Ether options means for market dynamics
Crypto News– On May 31, 69,000 Bitcoin options worth $4.7 billion and 920,000 Ether options worth $3.5 billion expired. The expiration of cryptocurrency options contracts has historically been associated with increased price volatility in the crypto market.
According to data from Derbit, the put/call ratio for the expired Bitcoin options (BTC) was 0.61. This indicates that more calls (or long contracts) expired than puts (or short contracts). Conversely, the put/call ratio for Ether (ETH) options was 0.46.
The put/call ratio (PCR) serves as a technical indicator reflecting trader sentiment in the market. A PCR below 0.7 typically indicates strong bullish sentiment, while a PCR above 1 suggests strong bearish sentiment.
The maximum pain point for Bitcoin is at $66,000, while for Ethereum it stands at $3,300
For Bitcoin, the maximum pain point, where leverage traders are anticipated to face the most losses, is $66,000. Meanwhile, for Ethereum, the corresponding point is $3,300. Currently, Bitcoin is trading at $68,210, which is $2,000 above its pain point, while Ethereum is trading at $3,738, exceeding its pain point by more than $400.
Millions in open interest (OI) are held in long positions with strike prices ranging from $70,000 to $100,000. Open interest refers to the total number of outstanding derivative contracts that have not yet been settled.
Several traders have opted for long positions on Bitcoin with a target price of $100,000. With $886 million in open interest (OI) at this strike price, the volume of long positions appears significant. The total notional value of all outstanding BTC options contracts amounts to $19 billion.
The aftermath of ETH approval: A lingering effect
The recent approval of the spot ETH ETF by the Securities and Exchange Commission (SEC) in May marked a significant and bullish event for the crypto market. Leading up to the approval, ETH prices surged by 20% in anticipation. However, it’s worth noting that the SEC only approved the 19b-4 filing, thereby postponing the actual listing for trading.
Following the ETH ETF approval, the crypto market has exhibited a sideways bearish trend, with ETH struggling to surpass the $4,000 mark and BTC facing resistance below the $70,000 price level. Presently, the crypto market is witnessing a bearish momentum, undergoing a correction phase after the bullish surge observed over the past two weeks.
FAQs
What do Bitcoin and Ether options expiring mean for the cryptocurrency market?
The expiration of Bitcoin and Ether options, totaling $8.2 billion, can have significant implications for market dynamics. It could lead to increased volatility and price movements as traders adjust their positions or hedge their exposures ahead of the expiry.
Why is the expiry of options contracts significant for Bitcoin and Ether?
The expiry of options contracts serves as a key event in the cryptocurrency market, as it often coincides with heightened trading activity and price fluctuations. Traders may choose to exercise their options, leading to changes in market sentiment and trading volumes.
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