Crypto Market Braces for Potential Disruption as Massive Bitcoin and Ether Options Set to Expire
Summary:
On May 31, Bitcoin options valued at $4.7 billion and Ether options worth $3.5 billion are due to expire, potentially causing market volatility. Current data reveals more long contracts nearing expiry than short ones. The maximum loss for Bitcoin and Ether leveraged traders is predicted at $66,000 and $3,300 respectively. Open interest trends show significant long positions, with many betting on Bitcoin reaching a $100,000 target. Post-approval of the spot ETH ETF by the SEC, the crypto market has shown bearish movement, with Ether under $4,000 and Bitcoin below $70,000.
As of May 31, Bitcoin options amounting to 69,000 units (valued at $4.7 billion) and Ether options worth $3.5 billion (920,000 units) will reach their expiry. Historically, the resolution stage of cryptocurrency options contracts correlates with fluctuations in market price. Data collected by Deribit reveals that the put/call ratio stands at 0.61 for the soon-to-expire Bitcoin (BTC) options, indicating a higher number of long contracts (calls) nearing expiry compared to short ones (puts). However, Ether (ETH) options display a put/call ratio of 0.46. This ratio, commonly referred to as PCR, provides insight into market sentiment, with a score below 0.7 signifying optimistic outlooks, and a score above 1 interpreted as strongly pessimistic.
Bitcoin could face its maximum level of pain at the $66,000 mark, whereas Ether's threshold stands at $3,300. If Bitcoin reaches this 'pain point', it indicates intense loss for leveraged traders, while currently, it is trading at $68,210, approximately $2,000 above the pain point. On the other hand, Ether trades at $3,738, comfortably over the $400 mark from its respective pain point.
The current open interest trends point towards substantial long positions at the strike prices of $70,000, $75,000, $80,000 and even the towering $100,000. Open interest, in this context, signifies the aggregate of derivative contracts that are unsettled. A considerable number of traders have placed long-position bets on Bitcoin, all aiming for a whopping $100,000 target price. A staggering $886 million is tied up in open interest (OI) at this staggering price, indicating a significant pool of long positions in place. The total value tied up in unresolved BTC options contracts amounts to $19 billion.
In the aftermath of the spot ETH ETF approval by the Security and Exchange Commission (SEC), there was an optimistic stir in the marketplace. This bullish move led to a 20% surge in Ether's price within May as traders anticipated the approval. However, the SEC only passingly accepted the19b-4 filing, thus postponing the actual trading listing.
Post-approval, the crypto market has turned bearish, with Ether unable to climb back over the $4,000 threshold, and Bitcoin struggling to break the formidable $70,000 barrier. Currently, the crypto market adjusts timidly from its optimistic surge over the past two weeks, demonstrating a cautious decline.
Published At
5/31/2024 12:54:32 PM
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