$5 Billion Bitcoin and Ethereum Options Expire: What Should Investors Prepare For?
The crypto market is entering a pivotal moment as over $5 billion worth of Bitcoin and Ethereum options officially expire today, an event that could create strong short-term volatility and influence market trends over the weekend.
Over $5 Billion in Options Expires Today
According to data from derivatives exchange Deribit, the total notional value of Bitcoin and Ethereum options expiring today exceeded $5.03 billion. Of this, Bitcoin options accounted for about $4.3 billion with a total open interest of 36,970 contracts. Ethereum contributed the rest with over $712 million and an open interest of 239,926 contracts.
This is one of the largest options expiry events of the month, surpassing the $3.6 billion recorded on July 4.
Put-to-Call Ratio Shows Mixed Market Sentiment
It is worth noting that both BTC and ETH options have Put-to-Call ratios of 1.06 and 1.11, respectively. This ratio reflects a relative balance between put and call options, indicating that traders are divided between bullish and bearish expectations.
Although not clearly bearish, this ratio suggests that some investors are taking hedging strategies, or preparing for a short-term correction. This could be the main reason why the market is expected to be volatile during the European session and early US session.
“Max Pain” and the Potential Price Effect
The concept of “max pain”the price at which most options expire worthless is defined as $108,000 for Bitcoin and $2,600 for Ethereum. While current prices have surpassed this level (BTC is trading around $116,800, ETH is at $2,970), the Max Pain theory suggests that market trends may fluctuate toward these levels as options near expiration.
However, history shows that the effects of Max Pain are usually short-lived, with asset prices quickly correcting as options positions are liquidated and the market settles into the new environment.
Market sentiment is cautious, but high leverage remains prevalent
A report from analytics platform Greeks.live shows that most recent trading activity is no longer focused on technical analysis but is more dependent on news developments. However, what is worrying is the rise of highly leveraged positions of up to 500x in the derivatives market.
Such high leverage can magnify profits but also multiply the risk of losses. In a market sensitive to options expiry events, such positions can create extreme volatility in just a few minutes if there is a price “sweep”.
Impact may last until the weekend
While the direct effect of options expiry events may take place in the first few hours of the European session, traders should pay attention to price trends over the weekend. This is a time when the market is often illiquid, causing price fluctuations to become stronger if trading volume is not evenly distributed.
However, analysts also believe that after the initial adjustment period, the market will soon rebalance, especially if there is no major negative news after the expiry time.
Conclusion
With over $5 billion in options expiring at the same time, the crypto market is facing a potentially volatile time. Investors and traders should be cautious in managing their risk, especially with highly leveraged positions. However, the current volatility may be temporary as the market restructures after options expiry.
The market is moving in the context of Bitcoin setting a new ATH and Ethereum maintaining a strong bullish momentum. This options expiry event is not only a challenge, but also an opportunity for those who know how to seize the right moment.