Bitcoin Under Pressure: The Effect of Options Expiration!

The imminent expiration of options on Bitcoin and Ethereum, representing a colossal value of $3 billion, is drawing particular attention in the crypto market. This event, scheduled for today, could trigger marked volatility, influencing the price direction of major cryptos. This context is conducive to an in-depth analysis of the impact of these expirations on market fluctuations.

The impact of options on Bitcoin

According to Deribit data, approximately $2.34 billion in bitcoin options are set to expire today, with a maximum pain point set at $66,000. This critical point is the price level causing the greatest losses to options holders.

With 36,732 contracts about to expire, this phenomenon is attracting investors’ attention, especially after the recent expiration of 61,320 contracts last week.

This reduction in the number of outstanding contracts could influence price movements, especially if the market approaches the pain point.

Analysis of these options reveals that the put-call ratio, an indicator of market trend, plays a key role.

A low put-call ratio indicates a predominance of call options, suggesting a bullish sentiment among traders.

However, the proximity of bitcoin’s price to the maximum pain point could accentuate volatility, as investors adjust their positions in response to market movements.

Ethereum options in the spotlight

For Ethereum, 183,756 contracts worth $577.2 million are also set to expire, with a maximum pain point of $3,300.

The put-call ratio for these options is 0.55, a relatively low figure that reflects optimistic sentiment among investors. This situation could stimulate trading activity, especially if prices approach this maximum pain threshold.

Ethereum’s volatility could be exacerbated by unpredictable price movements around this expiration.

Options traders often adjust their positions to minimize losses or maximize gains, which can lead to significant price fluctuations. Additionally, the recent drop in the Dvol volatility index to historically low levels suggests a period of relative calm, but this could quickly change.

Volatility and crypto market outlook

The impact of the expiration of options on Bitcoin and Ethereum is far from negligible. The drop in the Dvol index from 62% to 48% indicates a decrease in volatility, but this lull could be misleading.

Major conferences such as Bitcoin 2024 and FOMC meeting decisions have helped stabilize markets, but investors remain cautious.

Current Bitcoin prices, around $64,714, and Ethereum at $3,178, reflect some stability, but uncertainty remains.

Analysts anticipate a relatively optimistic quarter, based on historical trends, but highlight the lack of major short-term opportunities. They recommend a cautious approach, focusing on medium and long-term call options.