As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed countless expiry events that have shaped the trajectory of various assets, including Bitcoin and Ethereum. This Friday, we are looking at approximately $2.8 billion worth of combined crypto options contracts expiring, which, while smaller than last month’s event, still holds significant potential to influence price action.
Around 23,400 Bitcoin option agreements are due to end or “expire” this coming Friday, December 6th. This marks the initial expiration date for December.
They hold approximately a quarter of the value from last month’s significant options expiration (which was worth $2.3 billion), and the upcoming year-end event at the end of this month is expected to be equally substantial.
Bitcoin Options Expiry
This week’s collection of Bitcoin options agreements reaches its maximum potential impact at $97,000, and the number of open long (call) contracts is slightly greater than the number of short (put) contracts, with a ratio of approximately 1 to 1. In simpler terms, there are roughly equal numbers of traders who are betting on Bitcoin’s price increase (long contract holders) and those who are betting on its decrease (short contract sellers).
The value or quantity of outstanding options contracts that have not yet expired is the greatest for the strike price of $100,000, amounting to $2 billion, as reported by Deribit. Meanwhile, the $120,000 strike price also shows a substantial figure in open interest.
Over the past nearly two weeks, data from the options market indicates that market participants are adopting a more cautious approach. Today’s price drop of over 100,000 units has further fueled this trend, leading to a substantial rise in short-term implied volatility. At present, options trading appears particularly well-suited for short-term strategies. This is the perspective shared by crypto derivatives provider Greeks Live.
6th December witnessed the expiration of 23,000 BTC options, featuring a Put-Call ratio of 1.11, a maximum pain point at around $97,000, and a total value of approximately $2.3 billion. Simultaneously, 147,000 ETH options expired, having a Put-Call ratio of 0.62, a maximum pain of about $3,500, and a notional value of roughly $570 million. In simpler terms, on the 6th, a significant number of Bitcoin and Ethereum options reached their end, with varying put-call ratios, pain points, and values attached to them.
— Greeks.live (@GreeksLive) December 6, 2024
According to Deribit’s report earlier this week, the ongoing rally might persist if traders choose to cash out their profits from altcoins and reinvest in Bitcoin (BTC) and Ethereum (ETH). This could potentially happen as Bitcoin surpassed $100,000.
As ETH nears its highest point in five months, this could rekindle its upward trend,” they noted.
147,000 Ethereum option contracts will expire today, representing an estimated total value of $569 million. The maximum potential loss or “max pain” for these options is set at $3,500 per contract. Furthermore, there are about 62% more call (buy) contracts than put (sell) contracts due to expire today.
This brings Friday’s combined crypto options expiry notional value to around $2.8 billion.
Crypto Market Outlook
Despite the expectation that crypto markets would continue rising, they unexpectedly plummeted significantly during late trading hours on December 5th. This sudden drop caused the total market capitalization to lose nearly $200 billion, falling short of its previous all-time high of $3.88 trillion.
The sudden decline of Bitcoin was due to excessive borrowing in the Bitcoin market, leading to a rapid drop in its value below $100,000 during a flash crash on December 5th. Interestingly, Bitcoin had reached an unprecedented high, nearly touching $104,000, only yesterday.
On the other hand, the value of the asset subsequently climbed to over $98,000 during the early Asian market hours on Friday.
It’s uncommon for crypto options expiration events to have a significant effect on the spot market. However, it’s well-established that situations where leverage is reduced, or liquidated (flush-outs), can lead to substantial corrections, as demonstrated in the past.
Read More
- SUI PREDICTION. SUI cryptocurrency
- „People who loved Dishonored and Prey are going to feel very at home.” Arkane veteran sparks appetite for new, untitled RPG
- LDO PREDICTION. LDO cryptocurrency
- Destiny 2: A Closer Look at the Proposed In-Game Mailbox System
- Clash Royale Deck Discussion: Strategies and Sentiments from the Community
- Jennifer Love Hewitt Made a Christmas Movie to Help Process Her Grief
- ICP PREDICTION. ICP cryptocurrency
- Naughty Dog’s Intergalactic Was Inspired By Akira And Cowboy Bebop
- Critics Share Concerns Over Suicide Squad’s DLC Choices: Joker, Lawless, and Mrs. Freeze
- EUR IDR PREDICTION
2024-12-06 11:58