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Tuesday, May 21, 2024

Will Markets Surge With a $3 Billion Crypto Options Expiry Event?

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With the asset tapping an all-time high of over $69,000 this week, will today’s big expiry event push Bitcoin prices higher or initiate a correction?

Around 29,000 Bitcoin options contracts will expire on March 8 with a notional value of around $2 billion.

This week’s expiry event is slightly less than last week’s, but a huge one worth more than $6 billion will occur at the end of March.

Bitcoin Options Expiry Looms

The put/call ratio for today’s Bitcoin options expiry is 0.86, which means that the sellers of long and short contracts are relatively evenly matched.

The max pain point, or the price at which most losses will be made upon expiry, is $60,000. Deribit data also reveals that there is a lot of open interest at $65,000 and $70,000 strike prices with $1.9 billion in notional value combined.

Crypto derivatives tooling provider Greeks Live reported that market volatility reached its greatest level in nearly a year this week. It added that all major term implied volatility (IV) is trending significantly higher, “with ultra-short-term IVs at one point reaching 100%.”

Implied volatility is a metric used to forecast the market’s expectations about the future price movements of an option’s underlying asset.

“Options volume and positions have risen, and the advantages of options have been very clear recently, with protected options for spot buyers and high leverage for long and short buyers, all of which are trading tools with very high profit/loss ratios.”

In addition to the Bitcoin contracts, around 270,000 Ethereum options are due to expire with a put/call ratio of 0.55.

These have a notional value of $1.05 billion and a max pain point of $2,950. Deribit data indicates that there is a lot of open interest at the $3,000 and $4,000 strike prices, with the latter being greater at $826 million.

Crypto Market Outlook

Crypto market capitalization has gained 2.2% on the day to reach $2.67 trillion. Bitcoin was closing in on $67,000 at the time of writing, following a daily increase of 1.8%.

Ethereum is doing better today with a 3.6% increase to push it over $3,900 for the first time in more than two years.

However, the two biggest movers on the day were Binance Coin (BNB), adding 10% to reach $468, and Shiba Inu (SHIB), cranking 11% as it closes in on a top ten position by market cap.

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