The US CPI data for July fell short of expectations, adding a layer of uncertainty to the cryptocurrency market. Analysts in the options market predict that the prices of BTC and ETH may become more volatile after these options expire.
The market dynamics, driven by a combination of economic indicators and options expirations, are forcing traders to prepare for possible price swings, with the cryptocurrency market nervously coping with increased volatility.
The impact of option expiration on BTC and ETH
Deribit exchange reported that $1.4 billion in Bitcoin options are about to expire, with the highest pain point at $59,500. The number of these options contracts fell to 24,383 from the previous week, with a put/call ratio of 0.83, and market sentiment is slightly bearish.
The Ethereum options expiration amount reached US$471.79 million, the number of option contracts decreased to 183,821, the maximum pain point was US$2,650, and the put/call ratio was 0.80, indicating that the market was cautious.
The "greatest pain point" represents the point where option holders could suffer the most price losses, while a lower put/call ratio generally means the market is optimistic.
Analysts pointed out that despite the expectation of rate cuts, Ethereum's performance is still weak, and the implied volatility has declined, favoring put options. The expiration of options may cause short-term sharp price fluctuations, and the market is preparing for this uncertainty.
Analysts' analysis of option expiration
Greeks.live analysts expressed their views on the expiring options market. He pointed out that the July CPI data missed expectations and hit the lowest point since March 2021, which stimulated market discussions about the Federal Reserve's possible interest rate cut in September, and the market generally expected a 25 basis point cut.
Analysts also noted that despite the ETF approval, Ethereum prices showed weakness, recovering only slightly, while short-term implied volatility fell and the market favored put options. The analysis also said that significant declines in implied volatility are uncommon in the options market, providing potential profit recovery opportunities for institutional-dominated sellers to compensate for hedging losses caused by previous market turmoil. At present, the term structure has stabilized and the market may remain closed for the time being, while the sale of mid-term options may provide a more favorable profit-loss ratio and provide strategic opportunities for traders.
Currently, market prices have fluctuated. Bitcoin has fallen from nearly $60,000 before the release of CPI data to a low of $56,078, and Ethereum has also fallen from $2,780 to a low of $2,515. The current trading price is $2,590. $BTC
Historical data shows that the expiration of option contracts often leads to sharp and short-term price fluctuations. Therefore, market participants need to be prepared for the uncertainty and volatility that will be brought about. It is expected that the market will gradually return to stability shortly after the expiration of medium-term options.
Conclusion:
The cryptocurrency market is entering a period of uncertainty due to the dual impact of option expiration and CPI data. Although the market may experience sharp fluctuations in the short term, historical experience shows that such fluctuations are often short-lived, and once short-term fluctuations subside, the market will quickly find a new equilibrium point. Therefore, investors should remain vigilant, but also maintain confidence in the long-term potential of the market.