Cryptocurrency options exchange Deribit said the Bitcoin market is likely to get "busy" over the next two days as options contracts worth billions of dollars are set to expire at 08:00 UTC on Friday. It is reported that 90,000 BTC option contracts worth US$5.8 billion and US$1.9 billion in Ethereum options are about to be settled.

Of the $5.8 billion in total Bitcoin open interest, approximately 20% is “in the money,” or has a favorable execution price compared to prevailing market rates. Ethereum options are similarly positioned. For a call option, in-the-money means that the strike price is below the current market price, while the opposite is true for a put option. Both allow holders to exercise the right to buy or sell at a profit, setting the stage for market volatility.

Deribit CEO Luuk Strijers said: “About 20% of BTC options that are about to expire are in-the-money options. Larger expiration dates may increase market volatility as traders close or roll over their positions. , which may also affect the price.”

Position rollover involves closing an existing trade on an imminent expiry and opening a new trade on a subsequent expiry to extend the holding period. In order to make a profit, sophisticated traders often choose to roll over profitable positions and allow profits to continue to grow.

Activity is likely to remain strong in the coming months as the U.S. SEC’s decision to approve an option related to the BlackRock Bitcoin ETF (IBIT) could accelerate institutional adoption. "One of the biggest potential drivers is ETF options. The U.S. Securities and Exchange Commission (SEC) has given its approval, but the OCC and CFTC have not and are unlikely to do so this week," Strijers said. And options expiring in the next few months are priced in a way that suggests a bullish outlook.

Strijers noted that the put-to-call divergence for BTC and ETH was negative after September expiration, which is a bullish indicator as calls are relatively more expensive than puts.

Call options provide the buyer with asymmetric bullish exposure to price increases, while puts provide insurance against market downturns.

The bullish bias in the options market is consistent with consensus that a new cycle of rate cuts by the Federal Reserve and similar moves by other central banks, including the People’s Bank of China, will support demand for Bitcoin and Ethereum.

Birtfinex analysts say the rally could accelerate once Bitcoin breaks through the $65,200 level.

Bitcoin’s biggest pain point on Friday’s expiration is $59,000, about 8% below the spot price, which does create some potential downward pressure as the expiration date approaches.

〈Deribit: The expiration of Bitcoin’s $5.8 billion quarterly option may cause market volatility〉 This article was first published on "Blocker".