The crypto markets are on edge today as $1.10 billion worth of Bitcoin options contracts are set to expire. Following a brief dip below $60,000, this major expiration could lead to short-term price volatility. Additionally, $510.08 million worth of Ethereum options will also reach their expiry. Crypto traders are bracing for potential market fluctuations as these deadlines approach.
Bitcoin and Ethereum Brace for Volatility
As reported by The Bit Journal, the market’s recent volatility has been significant, and data suggests more may be on the way. Compared to last week, there has been a substantial increase in expiring Bitcoin and Ethereum contracts. According to Deribit data, 18,271 Bitcoin options contracts will expire today, with a put/call ratio of 0.90. The max pain point for Bitcoin is $62,000.
For Ethereum, 212,175 contracts will expire today with a put/call ratio of 0.40. The max pain point for Ethereum is $2,450.
While Bitcoin briefly dropped below $60,000, it shows signs of recovery with a bullish outlook following the expiry. Currently trading at $60,612, Bitcoin is below its max pain point. On the other hand, Ethereum is trading at $2,407, also below its max pain point of $2,450. Analysts at Crypto Town Hall emphasize that “pay attention to the ratios and max pain levels, as they provide clues to where the market is heading.”
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Both Cryptos Are Trading Below Max Pain Levels
As the expiry of Bitcoin and Ethereum options approaches, both assets are expected to move toward their respective strike prices. This movement is a reflection of the Max Pain Theory, which predicts that options prices will converge around the strike prices where the highest number of contracts expire worthless. Large institutions, often referred to as “smart money,” typically sell these options and have an incentive to push prices toward the max pain level in the spot or futures markets. This strategy often results in options buyers losing the most value.
As the expiration nears, both Bitcoin and Ethereum are likely to gravitate toward their max pain points. However, price pressure should ease after the options expire. Currently, those who have purchased put options on BTC and ETH are poised to benefit. Given the market’s underperformance, options sellers will likely push prices higher to minimize their losses.
“A Shift Is on the Horizon in the Crypto Market!”
Analysts from Greeks.live suggest that this market shift may present new trading opportunities for investors. The recent market weakness has created conditions ripe for strategic moves. The analysts also note that Bitcoin is showing flat implied volatility (IV), making it an ideal time for buying medium- and long-term calls. Additionally, block call trading has become more active this week. As the analysts explain:
“Crypto’s weakening around the $60,000 level and Ethereum’s approach to its long-term support at $2,300 signal that a shift may be on the horizon. The first two weeks of Q4 have been weak, with the options market showing a decline. Current open interest is at its lowest since early 2023, but a stagnant market also brings new trading opportunities.”
- https://twitter.com/Thebitjournal_
- https://www.linkedin.com/company/the-bit-journal/
- https://t.me/thebitjournal
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