How the Expiry of the $4 Billion Options will Affect BTC and ETH
With nearly $4.6 billion in options contracts on Bitcoin (BTC) and Ethereum (ETH) expiring, the cryptocurrency market is bracing for increased volatility.
With nearly $4.6 billion in options contracts on Bitcoin (BTC) and Ethereum (ETH) expiring, the cryptocurrency market is bracing for increased volatility. Considering the impact of these macroeconomic events on the market's mood, traders see this significant options expiry, which comes after the US elections and the Federal Open Market Committee (FOMC) meeting, as a crucial event.
Here's a look at how the expiry will affect the price dynamics of the two major cryptocurrencies by capitalisation.
The Analysts Affirm that the Options Market is Highly Polarised.
38,623 Bitcoin options contracts will expire on November 15. These contracts have a total value of $3.4 billion.
The maximum pain point is set at $80,000. The put/call ratio is 0.85. Also expiring today are 189,662 options contracts on Ethereum, worth $581 million. The maximum pain point for these contracts is at $3,000, with a put/call ratio of 0.91.
In options trading, the maximum pain point refers to the price level of the asset at which option holders suffer the greatest losses. The put/call ratio is a comparison between the number of down and up options. This indicator helps to understand which sentiment prevails in the market.
A put/call ratio of less than 1 indicates that traders are betting on Bitcoin and Ethereum prices rising further.
Most investors are confident that the price of BTC will reach $100,000 by the end of the year. However, the market still faces two major option expiries, which could significantly influence the dynamics of cryptocurrencies and their trajectory in 2025.
In the run-up to the expiry, the market could experience increased volatility. Therefore, traders should be very cautious.
According to CoinGecko, at the time of writing, Bitcoin is trading at $88,294, down 1.7 per cent in the past 24 hours. At the same time, the price of Ethereum is down 3.9% to $3,069.
Implications for the Market
When it comes to predicting price changes after options expire, the idea of the "maximum pain point" is crucial. According to this hypothesis, prices tend to move towards the level where the largest number of contracts, both puts and calls, expire worthless. The fact that Bitcoin is currently trading near its maximum pain point could help keep prices stable at this level. Ethereum, on the other hand, is trading below its maximum pain point, which could result in gains for some option holders.
Volatility Expectations
As traders adjust their strategies, this option expiry event is expected to increase market volatility. Historically, such significant expirations have had an impact on short-term price movements. With more than $10 billion in daily trading activity across the entire market in the days leading up to the event, the significant notional value of these contracts suggests higher trading volumes.
The expiry of these options highlights how spot market dynamics and derivatives trading interact, making this a crucial area for both institutional and retail investors as they navigate the evolution of the Bitcoin ecosystem.
With nearly $4.6 billion in options contracts on Bitcoin (BTC) and Ethereum (ETH) expiring, the cryptocurrency market is bracing for increased volatility. Considering the impact of these macroeconomic events on the market's mood, traders see this significant options expiry, which comes after the US elections and the Federal Open Market Committee (FOMC) meeting, as a crucial event.
Here's a look at how the expiry will affect the price dynamics of the two major cryptocurrencies by capitalisation.
The Analysts Affirm that the Options Market is Highly Polarised.
38,623 Bitcoin options contracts will expire on November 15. These contracts have a total value of $3.4 billion.
The maximum pain point is set at $80,000. The put/call ratio is 0.85. Also expiring today are 189,662 options contracts on Ethereum, worth $581 million. The maximum pain point for these contracts is at $3,000, with a put/call ratio of 0.91.
In options trading, the maximum pain point refers to the price level of the asset at which option holders suffer the greatest losses. The put/call ratio is a comparison between the number of down and up options. This indicator helps to understand which sentiment prevails in the market.
A put/call ratio of less than 1 indicates that traders are betting on Bitcoin and Ethereum prices rising further.
Most investors are confident that the price of BTC will reach $100,000 by the end of the year. However, the market still faces two major option expiries, which could significantly influence the dynamics of cryptocurrencies and their trajectory in 2025.
In the run-up to the expiry, the market could experience increased volatility. Therefore, traders should be very cautious.
According to CoinGecko, at the time of writing, Bitcoin is trading at $88,294, down 1.7 per cent in the past 24 hours. At the same time, the price of Ethereum is down 3.9% to $3,069.
Implications for the Market
When it comes to predicting price changes after options expire, the idea of the "maximum pain point" is crucial. According to this hypothesis, prices tend to move towards the level where the largest number of contracts, both puts and calls, expire worthless. The fact that Bitcoin is currently trading near its maximum pain point could help keep prices stable at this level. Ethereum, on the other hand, is trading below its maximum pain point, which could result in gains for some option holders.
Volatility Expectations
As traders adjust their strategies, this option expiry event is expected to increase market volatility. Historically, such significant expirations have had an impact on short-term price movements. With more than $10 billion in daily trading activity across the entire market in the days leading up to the event, the significant notional value of these contracts suggests higher trading volumes.
The expiry of these options highlights how spot market dynamics and derivatives trading interact, making this a crucial area for both institutional and retail investors as they navigate the evolution of the Bitcoin ecosystem.
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