The cryptocurrency market is set for increased volatility today as nearly $4.6 billion worth of Bitcoin (BTC) and Ethereum (ETH) options contracts expire. This significant event follows closely behind major developments in the United States, including the outcome of the US elections and the Federal Open Market Committee (FOMC) meeting. Both events have shaped market sentiment in the last week, and traders are bracing for possible price swings as the expiration of these options contracts occurs.

US Elections and FOMC Meetings Fuel Crypto Sentiment

The US elections, which have seen Donald Trump secure a victory, have created a surge of optimism in the crypto market. Trump’s pro-crypto stance, including his plans to overhaul US crypto regulations, has been well-received by investors. This sentiment has been reflected in Bitcoin’s recent price action, which has been bullish, hitting new all-time highs. Many market participants are now betting that under Trump’s leadership, the US could become a leading hub for Bitcoin mining and blockchain innovation.

Meanwhile, the FOMC’s recent interest rate decision has also had an impact on the crypto market. On November 7, the Fed declared a 25 basis point rate cut, with Chairman Jerome Powell signaling that the Fed’s policy would remain accommodative for the time being. This dovish stance on interest rates has provided additional support for assets like Bitcoin and Ethereum, which have seen a resurgence in demand due to the softer monetary policy.

Expiring Bitcoin and Ethereum Options Contracts

According to data from Deribit, a major crypto options exchange, today’s expiration involves 48,794 Bitcoin options contracts, valued at approximately $3.7 billion. The expiration comes with a put-to-call ratio of 0.72, which suggests a slightly more bearish market sentiment than bullish. The maximum pain point for Bitcoin options stands at $69,000, a price level at which the largest number of contracts would expire worthless, causing significant financial losses for traders.

Similarly, the Ethereum options market is seeing 294,380 contracts worth $854.88 million set to expire. The Ethereum contracts also show a put-to-call ratio of 0.65, indicating a more optimistic market outlook, though still leaning toward neutral. The maximum pain point for Ethereum is at $2,500. As with Bitcoin, this means that the price level where the largest number of options holders would incur losses is $2,500 for Ethereum.

The Cooling of Election Hype

While both Bitcoin and Ethereum have enjoyed bullish runs over the past few weeks, analysts are noting a shift in market sentiment as the election hype begins to fade. Following the news of Trump’s election victory, crypto traders were quick to adjust their positions, with many expecting a favorable regulatory shift under Trump’s leadership. This excitement drove higher trading volumes, with Deribit recording an all-time high of $10.8 billion in options trading on November 6. However, as the market adjusts to the post-election reality, the bullish sentiment is cooling off.

Greeks.live, a crypto analytics firm, pointed out that profit-taking has begun to dominate the market as traders close positions that were set up in anticipation of the election outcome. The firm also noted that Bitcoin’s “doomsday options” have fallen below 50%, signaling reduced bearish bets and an overall reduction in market anxiety.

The cooling of the election-driven rally has led to a decline in implied volatility (IV) for both Bitcoin and Ethereum. While Ethereum has benefited from today’s gains, it is still showing signs of less volatility compared to Bitcoin, which has experienced a larger retracement in price.

Large Investors Eye Year-End Market Moves

With the election narrative beginning to settle, large investors are now looking toward year-end market strategies. Greeks.live suggests that institutional players are already positioning for 2025, focusing on the broader macroeconomic outlook rather than short-term election impacts. The firm added that many large holders of crypto are beginning to lay out their plans for the spring of 2025, as they anticipate more strategic moves in the coming months.

Conclusion

Today’s $4.6 billion in expiring Bitcoin and Ethereum options represents a critical juncture for the crypto market. With both Bitcoin and Ethereum experiencing bullish rallies in recent weeks, driven by the US elections and the FOMC’s rate cut, the expiration of these contracts could lead to increased volatility in the short term. The maximum pain points for Bitcoin and Ethereum options suggest that traders are closely watching the $69,000 and $2,500 levels, respectively.