As we approach the end of the week, approximately 107,000 Bitcoin options contracts are set to expire, representing a notional value of $6.6 billion. This end-of-month expiry event is significantly larger than typical end-of-week expiries, which may result in increased market volatility. Interestingly, the put/call ratio for today’s BTC derivatives stands at 0.5, indicating that twice as many long (call) contracts are expiring compared to shorts (puts). The max pain point, where the most losses are anticipated, is calculated to be $57,000, approximately $4,000 lower than the current spot prices.
In addition to the substantial Bitcoin options expiration, around a million Ethereum options are also set to expire today. These contracts have a put/call ratio of 0.59, a max pain point of $3,100, and a notional value of $3.6 billion. With this expiration, the total crypto options expiration notional value surpasses $10 billion. Observers suggest that Ethereum ETF news could bring further clarity early next month, impacting implied volatility that is expected to experience a downward trend following today’s delivery.
While the total market capitalization has slightly recovered from a recent dip to hover around the $2.4 trillion mark, sentiment in the cryptocurrency market remains bearish. Throughout the month of June, markets have seen a downtrend with fluctuations in prices. Bitcoin, having briefly surpassed $62,000 on June 28, retreated to $61,500 at the time of writing. The digital asset seems to be consolidating around this level after dropping below $60,000 on June 24. Similarly, Ethereum prices had a recovery phase from a five-week low of $3,260 on Monday, climbing back to $3,430 at present.
In analyzing the cryptocurrency derivative market, it is evident that bulls maintain control in Bitcoin options markets, with over $340 million in open interest at higher strike prices of $70,000, $75,000, and $80,000. The total open interest rises to $590 million at $90,000 and spikes to $770 million at the $100,000 strike price. On the other hand, the atmosphere in the market throughout June was described as pessimistic, with BTC and ETH prices nearing the max pain point, an occurrence previously deemed improbable.
Overall, as the cryptocurrency options market experiences a significant expiration event, traders and investors should remain vigilant of potential market movements and volatility. The interplay of various factors, including open interest, put/call ratios, max pain points, and total notional values, will likely influence price action and sentiment in the coming days.
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