Is the Bitcoin and Ethereum Market Set for a Big Move After Options Expiry?
Bitcoin and Ethereum – This week, over $2.5 billion worth of Bitcoin and Ethereum options contracts are set to expire, with the market closely watching the potential impact on prices. Bitcoin, which has been struggling to break past the $100,000 mark, remains well below that psychological level. The expiration of options contracts could lead to heightened volatility, but will this event push prices higher over the weekend?
Expiration of Bitcoin Options Contracts
On February 14, 2025, around 21,362 Bitcoin options contracts are set to expire. The notional value of these contracts stands at $2.07 billion, according to data from Deribit. The market’s put-to-call ratio is 0.66, indicating a higher prevalence of calls (buying options) over puts (selling options). This suggests that more traders are betting on price increases for Bitcoin.
As these Bitcoin options expire, the maximum pain point for Bitcoin is at $98,000. This is the strike price at which the highest number of contracts will expire worthless, causing the greatest financial losses for holders. While Bitcoin remains below $100,000, the expiry could lead to volatility, with some traders hoping for a bounce toward the max pain level.
Ethereum’s Options Expiry and Impact
Ethereum’s options contracts are also nearing expiration, with 176,742 contracts worth a total notional value of $479.01 million set to expire. The put-to-call ratio for Ethereum’s expiring options is 0.64, with the maximum pain point at $2,725. Similar to Bitcoin, this signals more traders are anticipating price increases.
Larger Expirations Last Week and Market Sentiment
This week’s options expiry is considerably smaller than the previous week, which saw around $3.12 billion worth of BTC and ETH options expiring. The expiry last week coincided with uncertainty surrounding US President Donald Trump’s tariffs, which contributed to Bitcoin’s price being stunted below $100,000. Despite this, options expiry events often lead to significant price volatility, so traders and investors are advised to stay alert.
Market sentiment this week has been characterized by weak consolidation. The implied volatility has dropped to its lowest level in almost a year, despite positive news from the US government. This indicates lower expected price swings, which could affect options pricing and trading strategies.
Institutional Sentiment and Short-Term Trends
According to Greeks.live, a market research firm, institutions are currently viewing February as a “junk time,” a period of low market activity and interest. This lack of institutional engagement could lead to low trading volumes and relatively flat crypto market prices. With Bitcoin trading around $96,714 and Ethereum at $2,696, both assets are nearing their maximum pain points.
Analysts suggest that prices could rise toward these levels as smart money aims to push them toward the maximum pain strike prices. The Max Pain theory states that options prices tend to move towards the strike prices where the highest number of contracts will expire worthless. This suggests that Bitcoin and Ethereum prices might rise to their respective maximum pain points in the final hours leading up to the expiry.
Implications for Traders and Investors
Traders should keep a close eye on the movements of Bitcoin and Ethereum as options contracts near expiration. The large scale of these expirations could contribute to heightened volatility in the market, with the potential for significant price swings. However, after 08:00 UTC on Friday, when Deribit settles the contracts, the pressure on prices is likely to ease. Still, the sheer magnitude of the expirations could cause short-term market fluctuations.
Despite the short-term turbulence, options data suggest optimism in the market, with a majority of traders betting on price increases. The lower-than-1 put-to-call ratios for both Bitcoin and Ethereum options indicate bullish sentiment, but it remains to be seen how much price action will actually occur once the expiry event concludes.
Final Thoughts: What’s Next for Bitcoin and Ethereum?
As the options expiry event plays out, Bitcoin and Ethereum may experience increased price volatility, particularly around their maximum pain points. The expiry of over $2.5 billion worth of contracts could lead to short-term price swings, but ultimately, the broader market sentiment will likely dictate whether a sustained rally follows. Traders should continue to monitor the developments in the crypto markets closely, as Bitcoin and Ethereum may still have a chance to test new price levels, depending on how the expiration event unfolds.
With institutions cautious in the current market environment and implied volatility remaining low, it’s clear that traders must stay alert for any potential shifts in market momentum. The next few days are critical for understanding how the expiration of Bitcoin and Ethereum options might shape the price trajectory for both cryptocurrencies in the coming weeks.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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