Around $2.5 billion worth of Bitcoin (BTC) and Ethereum (ETH) options are expiring today, following a tumultuous market crash on Monday. This event has investors on edge, watching closely to see how it may impact market conditions and the ongoing recovery process.
The Impact of Options Contract Expiration on Cryptocurrency Markets
In particular, Deribit reports that $1.94 billion worth of Bitcoin options are set to expire, with a maximum loss potential of $60,000. This expiration includes 31,615 contracts, showing slightly less activity compared to the previous week. Despite recent volatility, the put to call ratio stands at 0.71, indicating an overall bullish sentiment in the market.
On the other hand, Ethereum options worth $552.13 million are expiring, involving 206,626 contracts. This represents an increase from the previous week and comes with a maximum spread of $2,950. The put to call ratio for Ethereum options is 0.95, pointing towards a slightly more balanced market sentiment compared to Bitcoin.
The options market’s pain point lies in the price level that causes the most financial discomfort to option holders. Currently, the ratio of buying options (calls) to selling options (puts) remains skewed towards the bullish side.
Analysis of Market Conditions Post-Expiration
Greeks.live analysts highlight that implied volatility for major options remains high at over 60%. Additionally, Bitcoin’s seven-day realized volatility is at 100%, significantly higher than the implied volatility level. This suggests that volatility may continue to be a key factor in the market in the coming days.
Following the market crash on Monday, where prices of Bitcoin and Ethereum took a significant hit, liquidations exceeded $1 billion according to Coinclass data. However, the cryptocurrency market has shown signs of recovery in the days following the crash. At the time of writing, Bitcoin has surpassed $60,000 once again, trading at $61,494, marking a nearly 10% increase in 24 hours. Ethereum has also seen a strong recovery, surging nearly 12% and trading at $2,671.
Navigating Market Volatility
Historically, options contract expirations have led to temporary but rapid price movements in the market. While volatility may persist in the short term, the market typically stabilizes over time. Traders are advised to stay vigilant, analyze technical indicators, and monitor market sentiment to effectively manage and navigate potential volatility in the cryptocurrency market.
