The expiry of approximately 19,300 Bitcoin options contracts, totaling a notional value of around $1.8 billion. As crypto markets have been retreating throughout the week, the question on every trader’s mind is whether this expiration will push markets even lower or trigger a potential reversal.

Bitcoin Options Expiry and Market Sentiment

The Bitcoin options contracts expiring today come at a time when Bitcoin has already been in retreat, having recently touched six-figure levels. The expiry of these contracts mirrors the event from the previous week, which had little to no impact on spot markets. However, with a current put/call ratio of 0.65, there are more long (call) contracts expiring than short (put) contracts. This indicates that, despite the recent correction, speculators are still relatively bullish on Bitcoin in the near term.

According to data from Deribit, open interest (OI) is highest at the $120,000 strike price, with $1.48 billion in OI. There is also significant open interest at the $100,000 and $110,000 levels, which suggests that traders are still holding optimistic positions. However, this week’s data reveals a more cautious market compared to previous periods, with implied volatility (IV) remaining low, indicating that the market is not pricing in significant future volatility at the moment.

Bitcoin Price Movement and Market Correction

Bitcoin’s price action has been erratic leading up to today’s expiry. It slid to an intraday low of $91,250 before recovering to $93,000 during morning trading in Asia. Despite this minor recovery, Bitcoin is down 9% since it peaked above $100,000 on January 7. The cryptocurrency is now approaching the lower bounds of a sideways channel that has held since mid-November. If Bitcoin fails to hold these levels, it could face a deeper correction.

The broader crypto market has been in the red as well, with the total market capitalization falling by 4.4% to $3.37 trillion. Much of the market’s anxiety stems from concerns over potential Bitcoin sell-offs by the US government, which could further rattle market sentiment.

Ethereum and Altcoins Feeling the Pressure

Ethereum is also experiencing significant pressure as its options contracts, worth a notional value of $455 million, are set to expire today. With a put/call ratio of 0.47, Ethereum traders are less bullish than Bitcoin traders, and this has contributed to the overall bearish sentiment in the market. Ethereum, along with many altcoins, has followed Bitcoin’s downward trajectory, deepening the ongoing market correction.

What’s Next for the Market?

As the expiration of $1.8 billion in Bitcoin options unfolds, the key question is whether the market will continue its decline or find support. The expiry event could either intensify the ongoing correction or offer a catalyst for a price rebound, depending on how traders position themselves.

Bitcoin’s price needs to hold its current support levels to avoid a deeper break to the downside. Given the combined expiry of Bitcoin and Ethereum options today, the market’s reaction could have a significant impact on the broader crypto market.

Conclusion: Eyes on the Expiry Impact

While the expiration of $1.8 billion in Bitcoin options might not have an immediate impact on the market, it remains a pivotal moment for traders. With the current market correction, any sudden shifts in sentiment, triggered by the expiry or broader macroeconomic factors, could either prolong the downturn or pave the way for a reversal. As always, traders should stay alert and be prepared for increased volatility as the market digests the impact of today’s options expiry.