This Friday, a significant amount of Bitcoin options contracts will reach their expiration date, totaling around 107,000 contracts with a notional value of $6.6 billion. This end-of-month expiry event is much larger than the usual end-of-week expiries, potentially leading to increased market volatility. The put/call ratio of these contracts is 0.5, indicating that twice as many long (call) contracts are expiring as shorts (puts). The maximum pain point, where most losses are expected to occur, is $57,000, which is approximately $4,000 lower than the current spot prices. Despite this, bulls maintain control over the Bitcoin options markets, with over $340 million in open interest at higher strike prices such as $70K, $75K, and $80K. Interestingly, total open interest rises to $590 million at $90K and $770 million at the $100K strike price.
Alongside the Bitcoin options, a substantial amount of Ethereum options are also set to expire. Approximately one million Ethereum options contracts will reach their expiration date, with a put/call ratio of 0.59, a maximum pain point of $3,100, and a notional value of $3.6 billion. This pushes the total crypto options expiration notional value to over $10 billion. Greeks Live observed that Ethereum ETF news will become clearer early next month, with expectations of implied volatility experiencing downward pressure post-expiration.
The total market capitalization has shown some recovery from a recent dip, hovering around the $2.4 trillion mark. However, sentiment in the market remains bearish, with a downward trend throughout the month of June. Bitcoin saw a recovery to surpass $62,000 on June 28, only to retreat to $61,500 at the time of writing. The cryptocurrency appears to be consolidating around this level after dropping below $60K on June 24. Similarly, Ethereum prices have rebounded from a five-week low of $3,260 on Monday, climbing back to $3,430 currently.
The expiration of Bitcoin and Ethereum options contracts has the potential to induce market volatility, especially with large notional values involved. The outcomes of these expirations will provide valuable insights into the current sentiment and direction of the crypto market. Investors should closely monitor these developments to make informed decisions regarding their positions and strategies in response to these significant events.