$8.05 Billion in BTC & ETH Options Expiry: Volatility Ahead?

Today, approximately $8.05 billion in Bitcoin and Ethereum options expired, likely sparking volatility. Bitcoin options comprise $7.24 billion and Ethereum $808 million. Trader positioning around key price levels signals possible price movements. Longer-term sentiment remains bullish for Bitcoin, amidst concerns regarding short-term fluctuations and overall market stability.

Today marks a significant event in the crypto market with the expiry of options contracts worth about $8.05 billion in Bitcoin (BTC) and Ethereum (ETH). This massive expiry is expected to trigger a wave of short-term volatility as traders adjust their positions. Data from Deribit indicates that Bitcoin options account for a hefty $7.24 billion, while Ethereum options bring in another $808 million. This adjustment period is critical, often leading to rapid price shifts in the market.

The put-to-call ratio indicates trader sentiment, with Bitcoin showing a ratio of 0.56 – meaning call options dominate – while Ethereum sits at 1.01. This suggests more puts than calls in Ethereum. The maximum pain point for Bitcoin is reportedly at $86,000, and it’s currently trading well above that at approximately $93,471. On the other hand, Ethereum is trading below its pain point of $1,900, currently around $1,764. Analysts at Deribit have commented on this stark difference, stating, “BTC above max pain, ETH below; Positioning into expiry is anything but aligned.”

Market behaviour surrounding expiries can get quite tricky, particularly as open interest for Bitcoin options is concentrated heavily between $80,000 and $90,000. Similarly, Ethereum’s open interest is gathered between $1,800 and $2,000. The positioning indicates that traders are keeping a close watch on these levels, typically acting as a magnet towards the maximum pain price during expiry times. With Bitcoin above and Ethereum below their respective pain points, mixed signals are feeding into traders’ decision-making processes.

Interestingly, today’s Ethereum options expiry brings a whopping 458,926 contracts, dwarfing last week’s 177,130. This increase in volume could impose additional pressure on Ethereum’s price as traders recalibrate their strategies post-expiry.

Despite the impending volatility, long-term bullish sentiment surrounding Bitcoin seems robust. Many traders are opting to sell cash-secured puts that allow them to collect premiums while also setting lower price targets for potential buys. According to Deribit, “BTC traders on Deribit are expressing a long-term bullish sentiment, selling cash-secured puts using stablecoins to potentially buy the dip and collect yield.” Moreover, notable open interest is being observed for Bitcoin options at the $100,000 strike price, highlighting expectations of significant price increases in upcoming months.

However, caution lingers, especially as prediction markets like Polymarket suggest only a slim 16% chance of Bitcoin reaching $100,000 by April. This indicates a more conservative approach, despite long-term optimism surrounding Bitcoin’s potential gains.

Added to this mix of factors is the increasing volatility attributable to the activity surrounding Bitcoin ETFs. The cumulative delta across Bitcoin and relevant ETF options has soared to $9 billion, which suggests a heightened sensitivity to price fluctuations. Short-term volatility appears poised to escalate as market makers seek to hedge their positions effectively.

Lastly, the current financial landscape is also influenced by external elements, including the potential reinstatement of Donald Trump’s tariff policies, which has reportedly dampened volatility and shifted some investor interest away from gold and cryptocurrencies. This mixture of factors creates a highly charged atmosphere in the crypto market this week, one that traders will need to navigate with care.