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Crypto Options Expiry Volatility: What Traders Need to Know

crypto options expiry

The crypto market has been buzzing with excitement since the fourth Bitcoin halving took place on April 20. However, contrary to expectations, the post-halving period did not witness a significant rally in Bitcoin or other cryptocurrencies. Now, all eyes are on the upcoming options expiry, which coincides with the release of the US PCE inflation data, a key indicator for market sentiment.

Bitcoin, the flagship cryptocurrency, is currently trading above $66,000, reflecting overall optimism among investors. However, with over 94,000 Bitcoin options, representing $6.3 billion in notional value, set to expire, traders are bracing for potential price fluctuations. The put-call ratio stands at 0.68, indicating a recent increase in put options as the monthly expiry approaches. The max pain point, where the maximum number of options expire worthless, is $61,000, below the current price. This suggests that the market could experience significant volatility, potentially leading to a pullback in Bitcoin’s price on the expiry day.

Meanwhile, Ethereum, the second-largest cryptocurrency by market capitalization, is also facing a substantial options expiry. With 941,000 Ethereum options expiring, totaling $3.1 billion in notional value, traders are closely monitoring the situation. The put-call ratio for Ethereum options is 0.49, signaling a relatively balanced market sentiment. However, the max pain point for Ethereum is $3,100, below the current price of $3,252, indicating the possibility of price corrections.

Recent trading activity has seen an increase in put open interest, with a put/call ratio of 0.84, suggesting a growing interest in downside protection. As a result, both Bitcoin and Ethereum prices could witness declines towards their respective max pain points.

The aftermath of the recent Bitcoin halving, which occurred on April 20, has failed to ignite the anticipated rally in cryptocurrency prices. Despite the optimism surrounding the halving event, Bitcoin and other digital assets have yet to experience a substantial surge. Now, all eyes are on this week’s options expiry, which promises to provide valuable insights into the market’s next move.

Traders are bracing themselves for potential volatility as they await the resolution of these options contracts. The sheer magnitude of the expiry, totaling $9.4 billion, underscores its significance and the potential for market fluctuations. This event comes amidst other key economic indicators, including the release of the US Personal Consumption Expenditures (PCE) inflation data, which serves as the Federal Reserve’s preferred measure of inflation.

The prevailing sentiment in the crypto market, as indicated by the Fear & Greed Index, has shown a notable uptick, with the index climbing from a neutral 57 to a greed-driven 72. However, traders remain cautious, awaiting clearer signals before committing to new positions.

In the realm of Bitcoin options, anticipation looms over the expiry of over 94,000 contracts valued at $6.3 billion. Recent trends have shown an increase in put options, with the put-call ratio standing at 0.68. This surge in put options suggests a growing sentiment of caution among traders leading up to the monthly expiry. The maximum pain point, calculated at $61,000, indicates a potential pullback in Bitcoin’s price, currently hovering above $66,000.

For traders looking to navigate this period of heightened volatility, several strategies could prove useful. Options traders may consider hedging their positions with put options to protect against downside risk. Additionally, keeping a close eye on market sentiment indicators, such as the Fear & Greed Index, can provide valuable insights into investor sentiment and potential market movements.

As the crypto market braces for the impact of the options expiry, traders should remain vigilant and adaptable to changing market conditions. While volatility may present challenges, it also offers opportunities for savvy traders to capitalize on price fluctuations and make informed trading decisions.

In conclusion, the upcoming expiry of over $9.4 billion in crypto options is likely to inject volatility into the market, impacting prices of Bitcoin and Ethereum. Traders should employ prudent risk management strategies and stay informed about market developments to navigate this period successfully.

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Sakamoto Nashi

Nashi Sakamoto, a dedicated crypto journalist from the Virgin Islands, brings expert analysis and insight into the ever-evolving world of cryptocurrencies and blockchain technology. Appreciate the work? Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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