Bitcoin options expiration and crypto market correction: Market awaits new developments
As the cryptocurrency market continues to fluctuate, this Friday (January 10) will witness the expiration of approximately 19,300 Bitcoin options contracts, with a notional value of approximately $1.8 billion. This expiration event is quite similar to last week's, and despite its large size, its direct impact on the spot market seems limited. After Bitcoin recently broke through the six-digit mark, its recent price correction has attracted widespread attention from market participants.
Bitcoin options expiry: bullish sentiment remains
The put-to-call ratio for Bitcoin options contracts expiring this week is 0.65, which means that there are more sellers of long (call) contracts than short (put) contracts. This data reflects the relative dominance of bullish sentiment among market participants. Data from Deribit shows that the value of open interest reached a peak of about $1.48 billion at an exercise price of $120,000. At exercise prices of $100,000 and $110,000, the value of open interest also exceeded $1 billion, respectively. These data show that despite the market's certain correction, speculators remain relatively optimistic about the future of Bitcoin.
Implied Volatility and Market Sentiment
Crypto derivatives provider Greeks Live noted earlier this week that short-term implied volatility (IV) has rebounded slightly but remains low. This means that market expectations for future Bitcoin price fluctuations have not changed significantly. Deribit mentioned in its weekly insights report that the market did not show the same level of excitement this time compared to the past two times when it broke the six-digit mark. This may be related to investors’ more mature expectation management of market volatility.
For traders who bet on short positions (put options) in Bitcoin, futures trading may be more profitable. However, overall, more traders are still buying call options, which further strengthens the bullish sentiment in the market. It is worth noting that despite the dominant bullish sentiment, market participants have not ignored potential risk factors.
Ethereum Options Expiration and Overall Market Dynamics
In addition to the expiration of Bitcoin options, about 140,000 Ethereum contracts expired this Friday, with a notional value of about $455 million. The put/call ratio of Ethereum options contracts is 0.47, showing a stronger bullish sentiment than Bitcoin. This makes the notional value of cryptocurrency options expiring on Friday total about $2.2 billion, becoming one of the focuses of market attention.
Crypto market correction deepens
As of writing, the total cryptocurrency market cap has fallen a further 4.4% on the day to $3.37 trillion. The correction could be linked to the U.S. government selling billions of dollars worth of Bitcoin, which, while not officially confirmed, is enough to cause market concerns. Bitcoin prices fell to an intraday low of $91,250, but recovered in early Asian trading on Friday to hit the $93,000 level. However, in the past 24 hours, Bitcoin prices have fallen another 2%, and have fallen 9% since breaking through six figures on January 7.
Market prospects and challenges
Bitcoin is currently approaching the lower limit of the horizontal channel that began in mid-November. This key level is crucial for Bitcoin to maintain its current price range. A break below this level could trigger a larger downside breakout. At the same time, market concerns about US inflation and fears of a potential large-scale sell-off have also increased market volatility. Ethereum and altcoins also showed a downward trend on Friday morning, showing the cautious overall market sentiment.
Despite the many challenges, the cryptocurrency market continues to demonstrate its unique resilience and potential. As more and more institutional and individual investors join this field, the market remains optimistic about the long-term prospects of Bitcoin and other cryptocurrencies. In the short term, investors need to pay close attention to market dynamics and policy changes to develop a reasonable investment strategy.
In summary, the Bitcoin and Ethereum options expiration events on Friday and the overall market adjustments remind us that the cryptocurrency market is still full of variables. While pursuing returns, investors should always remain vigilant and treat market fluctuations and risks rationally. How the market will develop in the next few days or even weeks remains to be seen.
