Bitcoin and Ethereum Options Expiration Amid Market Volatility
While Bitcoin (BTC) broke a new record and Ethereum (ETH) was very close to breaking its 2021 ATH, there was a significant pullback after the US PPI data that exceeded expectations. While it remains uncertain which direction the market will move, the expiration date for option contracts in the crypto market has arrived today, as it does every Friday.
According to data for the third week of August, $4.7 billion worth of Bitcoin and $1.3 billion worth of Ethereum options will expire on August 15 on the Deribit derivatives exchange. Accordingly, the Put/Call Ratio of BTC options is 0.90, the maximum loss point is $117,000 and the notional value is $4.7 billion.
When we look at Ethereum, ETH options have a Put/Call Ratio of 1.02, a maximum loss point of $4,000, and a notional value of $1.3 billion. The maximum pain point is the level at which the cryptocurrency price settles at a certain value as an option approaches its expiration date, resulting in significant losses for the largest number of option traders.
At this point, significant volatility could be seen in Bitcoin’s price following the $4.7 billion options expiration on August 15th. While the maximum pain point is at $117,000 for BTC and $4,000 for Ethereum, investors could push prices to this level through market manipulation, as market prices are above the maximum pain point.
The put/call ratio for Bitcoin of 0.90 also indicates that there are slightly more call options (bets on a price increase) than put options (bets on a price decrease). This suggests that option traders are taking a bullish position despite the price trading above its maximum pain level.
The same isn’t true for Ethereum. ETH’s put/call ratio of 1.02 indicates that put options (bets on a price decline) are slightly more active than call options (bets on a price increase). A ratio closer to 1 suggests investors are in a slightly bearish but balanced market.
Analysts at Greeks.live stated that the unexpected correction in the Bitcoin and cryptocurrency markets was due to the PPI data. However, despite this sharp correction, analysts noted that there were no major changes in the options market.
Analysts reported a trading volume of $10.9 billion on Deribit, marking the first time trading volume has surpassed the $10 billion mark in a single day. Despite the decline, analysts noted that this record indicates an upward trend, saying, “high trading enthusiasm suggests the market is not worried about its future and the bull market is likely to continue.”
*This is not investment advice.
