Ethereum
$4.7 Billion in Bitcoin, Ethereum Options to Expire! Are the predictions going wrong?
- $4.7 billion worth of BTC and ETH options are about to expire, which could influence market volatility.
- The technical analysis on the chart shows us the possible price movements for Bitcoin and Ethereum after the options expire.
Today in the financial markets, all eyes are on the cryptocurrency sector as it prepares for a major event.
Both Bitcoin [BTC] And Ethereum [ETH] have seen considerable fluctuations recently, with Bitcoin up 1.4% and Ethereum gaining 0.7% over the past 24 hours with a current price of $68,223 and $3,733, respectively.
This activity is notable, especially since Ethereum has outperformed with a 23.3% increase over the past two weeks, likely spurred by the U.S. Securities and Exchange Commission’s recent approval of an ETF in counting for the asset.
This set the stage for today’s (May 31) main event: the expiration of a colossal $4.7 billion notional value of BTC and ETH options contracts.
Decoding Crypto Options
Options in the cryptocurrency market operate similarly to traditional finance, where traders have the right, but not the obligation, to buy (call option) or sell (put option) an asset underlying at a specified price before the contract expires.
The Deribit platform data revealed an expected increase in market volatility triggered by options expiration today. This is supported by the significant volume of Bitcoin and Ethereum options expected to close.
A detailed look at the options market shows a higher number of call options, indicating bullish sentiment among traders. Specifically, the put/call ratio for Bitcoin stands at 0.61, suggesting bullish contract dominance.
The maximum pain point, where option holders suffer maximum financial loss, is set at around $66,000, which is considerably lower than current trading prices.
Source: Déribit
Notably, options with strike prices up to $100,000 carry significant open interest, totaling a notional value of $886 million. This optimism is contrasted sharply on the downside by a substantial open stake of $519 million at the strike price of $60,000.
Notably, the current notional value of BTC call options stands at $2.9 billion.
Source: Déribit
For Ethereum, the scenario is slightly different. On that day, the notional value of Ethereum call contracts will expire around $1.8 billion, with a put/call ratio of 0.84.
This ratio suggests a more balanced view among traders regarding Ethereum’s near-term price outlook. Open interest in Ethereum futures is also peaking near all-time highs, influenced by speculative trading following the ETF approval.
Source: Déribit
Technical analysis and market forecasts
To understand how Bitcoin (BTC) and Ethereum (ETH) might react to today’s significant options expiration, a technical analysis of their respective charts is essential.
From Bitcoin, the daily swing structure places BTC in a premium zone, usually a signal for potential sell into the discount zone before a reversal.
A closer look at lower timeframes reveals that Bitcoin recently encountered a critical supply zone on the 4-hour chart, suggesting possible downward pressure.
Although no substantial break to the downside occurred after testing this zone, the 2-hour chart confirms another test of a supply zone, hinting at a potential short-term decline to the level of $67,000, potentially marking the first downward structural break in the market. 4 hour chart.
Source: TradingView
Similarly, Ethereum tested a supply zone on its 4-hour chart, indicating a possible downtrend as it remains in the premium zone on the daily chart.
The asset’s 2-hour chart shows minor structural breaks to the downside, suggesting a continued downtrend towards the $3,500 level.
Source: TradingView
Against the backdrop of these technical movements, both cryptocurrencies have already inflicted losses on some traders.
According to Coinglass, Bitcoin traders faced $19.92 million in liquidations, while Ethereum traders saw approximately $19.63 million in liquidations.
Read Bitcoin (BTC) Price Prediction 2024-25
Additionally, an AMBCrypto report Remarks that the relative strength index (RSI) and money flow index (MFI) for Bitcoin are at 53.85 and 57.94, respectively.
These numbers indicate a balanced market in which neither buyers nor sellers have dominant control, leading to continued price consolidation or limited movement within ranges.