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How will cryptocurrency markets react to the massive $4.7 billion Bitcoin options expiration today?
Cryptocurrency markets fell slightly this week as sentiment waned following last week’s U.S. Securities and Exchange Commission approval of spot Ethereum exchange-traded funds.
However, volatility could increase when Bitcoin options contracts with a notional value of as much as $4.7 billion expire on May 31.
The contract deadline of 69,200 is huge compared to The past few weeks event, as month-end derivatives activity usually is, second in Deribit.
Bitcoin Options Expiry
The put/call ratio for this tranche of Bitcoin options is 0.61. This means there are more calls (or long contracts) expiring than puts (or shorts). The point where most losses will be made, called the maximum pain point, is around $65,000, which is $3,500 lower than current spot prices.
There is a lot of open interest, or contracts that have yet to expire, on long positions, including strike prices at $70,000, $75,000, $80,000, and even $100,000, where the OI is $886 million.
On the short side, the $60,000 strike price has the highest OI of $519 million. This suggests that derivatives traders remain bullish on Bitcoin and expect higher prices.
The total notional value of OI for all outstanding BTC options contracts amounts to a whopping $19 billion.
In addition to today’s large amount of Bitcoin options, there are approximately $3.7 billion in notional value Ethereum contracts expiring. The 910,000 contracts have a put/call ratio of 0.84 with long and short sellers more evenly matched than the BTC contracts.
Additionally, aggregate open interest in Ethereum futures hovered near all-time highs around $17 billion this week, driven by speculation about the ETF’s spot decision.
Cryptocurrency market outlook
Spot markets rarely react to options expiration events, but today’s is a big deal. Total capitalization remained relatively stable at $2.68 trillion. In fact, cryptocurrency markets have moved very little over the last 12 days or so.
Bitcoin rose 1.2% on the day, sitting at $68,489 at the time of writing, while Ethereum was down slightly at $3,751.
Altcoins were mostly still in the red, adding to their declines over the past few days, and meme coins were taking a particularly prominent place bigger beat.