Market Awaits Impact of Nearly $3 Billion Bitcoin and Ethereum Options Expiring Today

Friday is crypto options’ expiration day. Nearly $3 billion in Bitcoin (BTC) and Ethereum (ETH) contracts are poised to be settled or renewed today. Crypto markets have been climbing on the colloquial Trump rally over the past several weeks, but can they keep going?

Expiring crypto options often leads to notable price volatility, prompting traders and investors to monitor today’s developments closely.

$2.72 Billion Bitcoin and Ethereum Options Expiring

Deribit reports that 20,815 Bitcoin contracts, with a notional value of $2.077 billion, are set to expire today. The put-to-call ratio stands at 0.83, indicating that traders continue to sell more calls (long contracts) than puts (short contracts).

The maximum pain point (the price at which the asset will cause financial losses to the largest number of holders) is $98,000. Notably, this is a little lower than the current spot market price of $99,758.

Bitcoin Options Expiration. Source:  Deribit

Meanwhile, 164,330 Ethereum options contracts, with a notional value of nearly $644 million, will also expire today. The put-to-call ratio is 0.68, indicating that, similar to Bitcoin, traders are selling more long contracts than short contracts.

Expiring Ethereum Options. Source:  Deribit

Greek’s Live commented that this week’s market was dominated by corrections, unlike last week’s, which was a smaller correction for Bitcoin and a stronger correction for the altcoins. However, with Christmas and annual delivery approaching, market makers are beginning to move positions.

“The recent Block call options trading accounted for a higher proportion, the daily average accounted for more than 30%. In previous years, the Christmas season in Europe and the US trading heat will be significantly reduced. This year, the influence of US stocks on the crypto rises, and this phenomenon may be more obvious,” Greeks Live said.

This raises the question of whether there will be a Christmas rally this month, as the market has once again come to a position of stronger divergence. Currently, BTC is oscillating below $100,000, whereas ETH is oscillating just shy of $4,000.

The last two weeks of options market data have been showing that market makers are more cautious. Amid sharp fluctuations in the market, there have been small rises in the main term implied volatility (IV). Against this backdrop, analysts at Greeks.live say options are currently very suitable for short-term gaming.

“…the cost-effective way to buy options is still very high,” they added.

Meanwhile, these expiring options come after a wild week from a US economic data perspective. US inflation rose to 2.7% in November, with core CPI remaining sticky at 0.3%. While a Fed rate cut is widely anticipated, stubborn inflation complicates the path for sustained monetary easing.