The expiration of the important Bitcoin and Ethereum options, valued at approximately $15 billion, took place today, June 29, 2024.
It is a notable event that could lead to further market volatility. This event is among the largest options expirations in history, with around $9.5 billion in Bitcoin options and $5.7 billion in #Ethereum✅ options about to expire. The impact on market prices may vary, with some analysts suggesting possible bullish volatility due to dealer hedging activities and the large number of options expiring in the money.
#Bitcoin❗️ is currently trading around $61,000 and Ethereum is around $3,400. The large options expiry could cause significant price movements, influenced by the actions of traders as they adjust their positions. The "maximum pain" point, where most options would expire worthless, is at $51,000 for Bitcoin and $2,600 for Ethereum, indicating that current prices are well above these levels, which could suggest upside pressure. rise in prices as traders adjust (Coinspeaker).
Overall, while greater volatility is expected, the exact impact on the market will depend on how traders and large holders of these options react in the hours after expiration
What is Bitcoin and Ethereum options expiration?
It refers to the moment when options contracts, which allow investors to buy or sell these assets at a specific price before a certain date, reach their deadline and are settled. Here are the key points about this process and its impact:
Bitcoin and Ethereum Options:
Call Option: Gives the buyer the right, but not the obligation, to purchase the underlying asset (Bitcoin or Ethereum) at a specific price (strike price) before the expiration date.
Put Option: Gives the buyer the right, but not the obligation, to sell the underlying asset at a specific price before the expiration date.
Importance of expiration:
Volatility: The expiration of a large volume of options can generate volatility in the market. This happens because investors and dealers adjust their positions, which can influence the prices of the underlying asset.
Dealer Hedging: Dealers who have sold options may need to buy or sell the underlying asset to hedge their positions, which can increase trading activity and potentially move market prices (CoinDesk) (CoinDesk).
Impact on the market:
Bullish Volatility: Some analysts suggest that the large number of options expiring "in the money" (when the market price of the asset is favorable to the option buyer) can lead to an increase in prices due to position hedging .
Maximum Pain Price: This is the price at which the greatest number of options expire worthless. For Bitcoin, this point stood at $51,000 and for Ethereum at $2,600, indicating that current prices are above these levels, which could suggest upward pressure on prices (Coinspeaker).
Options expiration is a regular event in financial markets that can have significant effects on volatility and short-term market direction, depending on the magnitude of options expiring and investors' positions.
