The crypto market may be gearing up for increased volatility as Bitcoin and Ethereum options worth $5.2 billion will be expiring this week.
The top two crypto assets by market cap seem to be warming up toward the expected volatility, considering their price performance in the past two days. For context, Bitcoin slipped over 3.5% from Monday’s over $69,000 high to $66,848, while Ethereum fell 4.4% from $2,752 to $2,631 at the time of writing.
Will Bitcoin Hit Maximum Pain Point?
Notably, these contracts will expire on Friday at 8:00 UTC. Data from Deribit shows that the $4.2 billion expiring Bitcoin options contracts have a maximum pain point of $64,000. For context, the maximum paint level is the price at which the market will inflict maximum loss on options traders.
According to popular opinion, market makers usually drive prices toward the maximum pain to deteriorate the amount traders make. As a result, the market experiences increased volatility toward notable options expiry dates.
Meanwhile, the put-call ratio remains at 0.62, signaling a slightly bullish precedence among options traders. Bookmakers expect the bullish market sentiment considering Bitcoin’s latest push above $69,000.
Notably, about $683 million of the $4.2 billion worth of Bitcoin options set to expire are in the money, accounting for 16.26% of the traded contracts. A staggering 83.74% of options trades expiring on Friday heavily rely on Bitcoin’s price movement towards their strike price, increasing expected volatility.
Ethereum Nears Max Pain
With about $1 billion worth of Ethereum options contracts expiring on Friday, the altcoin king is barely 1% away from its maximum pain point. Ethereum trades at $2,631 at the time of writing, while the maximum pain is at $2,600.
Notably, Ethereum’s put-call open interest ratio stands at 0.95, signaling bearish price outlooks from traders. The put open interest nearly matches the call open contracts, standing at 194,050 and 205,155, respectively.
Furthermore, the presiding bearish outlook for the Ethereum price mirrors its lackluster performance compared to other high-caliber assets. For context, Ethereum is the worst-performing coin in the top five crypto ranking by market cap, posting a meager 2.07% growth in the past 30 days.
Bitwise’s CIO Matt Hougan earlier noted that Ethereum is the best contrarian crypto bet for the year. The executive cited bearish sentiments around the asset as reasons for its underwhelming price performance. However, he expects an Ethereum rebound by 2025.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
