The crypto market is set for increased volatility today, as around $1.6 billion in Bitcoin and Ethereum options are due to expire. This coincides with the Federal Reserve's recent decision to cut interest rates by 50 basis points (bps), a move that has already boosted Bitcoin and Ethereum prices.
According to Deribit, over 20,000 Bitcoin options contracts worth $1.26 billion are expiring, with a put-to-call ratio of 0.85 and a maximum pain point of $58,500. In Ethereum, 125,046 contracts worth $308 million are also expiring today, with a put-to-call ratio of 0.65 and a maximum pain point of $2,350. The "maximum pain point" is the price level where most traders lose the most money.
Analysts at Greeks.live highlighted the Fed's rate cut as a factor that lowered implied volatility by 25% across short-term options. However, they warn that while crypto markets rallied, with Bitcoin jumping above $63,500 and Ethereum hitting $2,482, these gains have since stabilized. Both assets now trade slightly lower, leaving traders cautious about potential short-term instability.
Looking forward, further rate cuts could trigger more market movement, especially around November and December's interest rate decisions, which could coincide with the U.S. election. Traders are advised to stay alert for possible corrections.