Will Crypto Markets march Higher when $1.4B Bitcoin Options Expire?
The upcoming expiration of $1.4 billion worth of Bitcoin options contracts on December 8 is likely to have a significant impact on the crypto markets. Around 33,000 BTC options contracts are set to expire, with a put/call ratio of 0.84, indicating slightly more call sellers than puts.
The total open interest, or the value of all contracts yet to be closed or expire, is close to record levels at $16 billion, according to Deribit[1]. This suggests that the market is very active, with traders positioning themselves for potential price movements.
There are currently two hot strike prices with more than 20,000 calls for both $40,000 and $50,000. Options markets are suggesting that Bitcoin will hit $50,000 by January 2024, which is the same month that Bitcoin ETF approvals are expected.
However, it's important to note that history has shown that when Bitcoin runs, it runs, and the approval of Bitcoin ETFs may already be priced into crypto markets.
In addition to the expiring Bitcoin options, around 207,000 Ethereum contracts will expire on December 8, with a notional value of $491 million and a put/call ratio of 0.58.
Ethereum derivatives have been lackluster lately, with all eyes on Bitcoin, but this may be starting to change as speculators eye the second-largest crypto asset.
The crypto market has been experiencing notable increases, with the leading sectors being Bot, Meme, and Arbitrum. However, it's crucial to keep in mind that the expiration of such a large amount of options contracts could lead to increased volatility in the markets.
In conclusion, while the expiration of $1.4 billion worth of Bitcoin options contracts on December 8 is likely to have a significant impact on the crypto markets, it's difficult to predict the exact direction of the markets.
Traders should be prepared for potential volatility and make informed decisions based on their risk tolerance and investment strategies.