Today, $18 billion worth of Bitcoin and Ethereum options are expiring, signaling market turmoil.
Today, $18 billion worth of Bitcoin and Ethereum options contracts will expire, a record for the cryptocurrency industry. This could cause unexpected volatility and provide great opportunities for traders and investors.
The value of Bitcoin options expiring is $14.38 billion, while Ethereum options are worth $3.7 billion. The number of expiring contracts today - 88,537 Bitcoin and 796,021 Ethereum - is several times higher than last week. This indicates increased activity and traders’ hopes of profit or reducing risk.
At 0.69, Bitcoin’s P/C ratio indicates confidence as more traders bet bullishly. Ethereum’s ratio has dropped to 0.41, indicating higher confidence in price growth. Lower P/C ratios indicate that more calls (bets on price rises) are being bought than puts.
BTC and ETH are trading above their maximum pain values. Ethereum is trading at $3,000, while Bitcoin is trading at $85,000. As prices approach the “maximum pain price” at expiration, options buyers suffer the biggest losses, causing market movements.
Bitcoin’s P/E ratio rose in Q4 2024 due to increased hedging positions, said David Lawant, head of research at FalconX. “The demand for downside protection has increased,” he added, suggesting that traders may be protecting performance indicators at the end of the year. Bitcoin’s P/E ratio for Dec. 27 options rose from 0.35 in October to more than 0.70.
Ethereum sentiment is mixed. Bitcoin’s P/E ratio has dropped from 0.97 at the end of October to 0.41, indicating a bullish trend. This change shows traders’ confidence in the stability or growth of ETH’s price.
Leveraged bets in favor of the bullish trend can cause strong market volatility, especially if prices deviate significantly from expectations. Analysts believe that this record expiration could set the market narrative for 2025 as traders eagerly anticipate further developments.