The cryptocurrency market will see $3.98 billion worth of Bitcoin (BTC) and Ethereum (ETH) options expire today. This massive expiration could impact short-term price action, especially as both assets have recently fallen.
With Bitcoin options valued at $3.4 billion and Ethereum at $581.57 million, traders are bracing for potential volatility.
High-Stakes Crypto Options Expiration: What Traders Should Watch Today
According to data from Deribit, Bitcoin options expirations totaled 38,566 contracts, down from 48,794 contracts last week. Similarly, Ethereum options expiring totaled 189,018 contracts, down from 294,380 contracts the week before.
Bitcoin options expire. Source: Deribit
For Bitcoin, expiring options have a maximum pain price of $79,500 and a put-to-call ratio of 0.85, reflecting bullish sentiment despite the recent correction in the asset’s price. In comparison, Ethereum options have a maximum pain price of $3,000 and a put-to-call ratio of 0.92, reflecting similar market sentiment.
Ethereum options expire. Source: Deribit
The maximum pain price is an important indicator that often guides market behavior. It represents the price at which most options expire worthless, causing the maximum financial “pain” for traders.
Meanwhile, the put-to-call ratios below 1 for both Bitcoin and Ethereum suggest optimism in the market, with many traders betting on prices rising. While put options represent bets on falling prices, call options indicate bets on rising prices. Taken together, this metric (put-to-call ratio) gauges market sentiment.
Traders and investors should be prepared for volatility, as options expirations often cause short-term price swings, creating uncertainty in the market.
“The market can be very volatile, so trade carefully,” a top Asian crypto influencer Wise Advice warns.
However, the market usually stabilizes quickly afterward as traders adjust to the new price environment. With today’s high-volume expiration, traders and investors can expect a similar outcome, which could potentially influence the future direction of the cryptocurrency market. As Bitcoin and Ethereum options near expiration, both assets could approach their respective strike values.
This is a result of the Maximum Pain Price theory, which predicts that option prices will converge around strike values where the largest number of contracts—both call and put options—expire worthless.
Many Hurdles to Year-End Crypto Options Expiration
With the market still bullish, the general sentiment is that Bitcoin’s upside potential is still real, with the possibility of hitting $100,000 before the end of the year. However, bigger challenges lie ahead, with many cryptocurrency options expiring at the end of the month and, potentially, more (around $11.8 billion for BTC) on December 27.
These dates are particularly significant as Bitcoin bull runs usually end right at the end of the year, from November to December. However, since they usually start from October to November, these bull runs often last into the new year.
The year-end Bitcoin options expiration could be a key catalyst that could influence immediate price action as well as the trend into the new year, 2025. While optimists see the year-end expiration as a unique opportunity to venture into uncharted territory beyond $100,000, pessimists are committed to limiting price discovery to protect their positions.
“Looking at the options market, the market is clearly polarized and trading is very fragmented, with some large traders looking to the sky to go long, while many traders are currently on the short side of the market,” Greeks.live shared.
If the positional war intensifies later in the year, the effects of this options expiry could spill over into December, setting new benchmarks for Bitcoin and Ethereum.
Latest data shows that Bitcoin's trading value has dropped by 2.46% to $87,813. Similarly, Ethereum has dropped by 5.43%, currently trading at $3,053.
Follow me @TinTucBitcoin #tintucbitcoin
