10 Billion BTC and ETH Options Expire Friday, Is a Rally Coming?
It's that time again when discussions about crypto derivatives activity take precedence
Options on $6.68 billion worth of bitcoin (BTC) and $3.5 billion worth of ether (ETH) on leading crypto derivatives exchange Deribit are set to expire.
Representing more than 40% of the current cumulative open interest of over $23 billion, the expiration could trigger an increase in market volatility. Large three-month expiries often lead to increased volatility, making prices more unpredictable due to higher trading volumes and position closures/renewals.
Options are derivative contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a specified date.
The fact that more than 25% of the open position will expire means that a significant number of derivative contracts are expected to be profitable for their holders at expiry.
Bitcoin, the leading cryptocurrency by market capitalization, has fallen nearly 9% this month and at one point tested below $60,000. As usual, the sell-off was mirrored in the broader market, dragging ether down by almost 10%.
According to Deribit CEO Luuk Strijers, "The latest price drop is due to miner sales and of course the Mt. Gox repayments, which are expected in early July."
According to data tracked by Amberdata, trading skews show that investors are willing to pay a higher premium for short-term and long-term purchases, offering asymmetric upside in sales.
"While short-term bearishness is evident, traders are looking at the options curve and forecasting a positive shift for bitcoin by July 12 and ETH by July 5. Trading in ETH ETFs is expected to start in the first week of July."
