The cryptocurrency market is bracing for increased volatility today as over $3.33 billion worth of Bitcoin (BTC) and Ethereum (ETH) options are set to expire. This expiration follows the release of U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data, both of which came in below expectations, adding a new layer of complexity to market dynamics.

According to data from Deribit, the majority of the expiring contracts are for Bitcoin, totaling approximately $2.76 billion. Meanwhile, Ethereum accounts for $569.42 million in expiring options.

The expiration of these contracts has the potential to influence short-term price action, particularly given the current macroeconomic backdrop and prevailing market sentiment.

Bitcoin Options Show Mixed Sentiment Near Key Price Levels

Deribit’s data reveals that 26,543 Bitcoin contracts are expiring, a slight increase from the previous week’s 25,925 open interest. The maximum pain point — the price level at which the most options expire worthless — is near $100,000. This level is significant because prices tend to gravitate toward it around expiry, minimizing losses for option sellers.

The put-to-call ratio for Bitcoin stands at 1.02, indicating a slight bias toward puts, or bearish bets. This suggests that traders expect a potential short-term pullback, or are hedging existing positions.

At the time of writing, Bitcoin was trading at $103,912 — above the max pain level, but below the recent local high of $105,000. According to analysts from Greeks.live, the rejection at $105,000 signaled an overextended market. Many traders have reportedly taken profits on long calls and rotated into more conservative strategies.

“Traders are becoming defensive after a rapid move,” noted the analysts, highlighting a preference for reducing exposure amid high prices.

Ethereum Follows Similar Pattern With Strong Bearish Bias

Ethereum is also facing a wave of expiring options, with 219,986 contracts involved. This marks a significant rise from last week’s total of 164,591 contracts. The max pain point for Ethereum sits at $2,300, while the current price stands around $2,572 — again, notably higher than the strike level.

However, Ethereum’s put-to-call ratio is more bearish than Bitcoin’s, standing at 1.36. This indicates that traders are leaning heavily toward protective or speculative bearish positions.

The market reaction may be influenced by these imbalances, particularly if prices drift closer to the strike zone near expiration. Short-term swings are common around large expiries, especially when there are large clusters of out-of-the-money options.

Macroeconomic Data Adds Uncertainty to the Mix

The timing of this options expiry coincides with a significant macroeconomic development. U.S. CPI data for April came in at 2.3%, the lowest since February 2021. Similarly, the PPI data also surprised to the downside, falling to 2.4%, below expectations of 2.5%.

These lower inflation readings could prompt the Federal Reserve to reconsider its current stance on interest rates. While the Fed has maintained a cautious tone, citing tariff risks and the 2% inflation target, fading consumer pressures could push policymakers toward earlier-than-expected rate cuts.

Lower rates typically benefit risk assets like cryptocurrencies, increasing investor appetite and encouraging speculative positioning in options markets.

“Rate cuts are back in play, markets aren’t ready for what’s coming,” commented crypto analyst Merlijn the Trader, alluding to the potential shift in investor sentiment.

Short-Term Volatility Expected but Often Short-Lived

As is often the case during major options expirations, the market could see increased volatility today, particularly around key resistance and support levels. Short positions above $105,000 for BTC and $2,600 for ETH may face pressure if bullish momentum reemerges.

Binance’s liquidation map indicates a dense cluster of short liquidations between $3.75 and $4.00 for SUI, showing a similar setup across various assets. If prices push higher, these shorts could be forced to close, leading to rapid price moves.

Despite the short-term turbulence, such effects are usually temporary. Markets often stabilize within a day or two as the options pressure subsides and liquidity returns to normal.

Traders are advised to monitor key technical levels, market sentiment, and broader economic signals closely before making decisions. While lower inflation data supports a bullish outlook for crypto in the longer term, short-term uncertainty may continue until the post-expiry dust settles.