As the cryptocurrency market navigates through turbulent waters, October 11 marks a significant event in the Bitcoin landscape: the expiry of approximately 18,800 Bitcoin options contracts, representing a notional value of around $1.1 billion. This expiry event mirrors last week’s patterns, as implied volatility continues to decline, and the overall market sentiment appears subdued.
What Does The Data Say?
A closer look at this week’s Bitcoin options reveals a put/call ratio of 0.91, indicating a balanced distribution between expiring long (call) contracts and shorts (puts). The max pain point, which is crucial for options traders as it represents the level at which the most losses will occur, sits at $62,000—approximately $1,500 above current spot prices. This suggests that many traders might be hoping for a minor price recovery to mitigate losses.
Despite the current challenges, open interest (OI) remains significant, particularly at the $70,000 strike price, where it stands at $790 million. Meanwhile, OI at the $80,000 strike price has dipped to $723 million, while the $100,000 strike price still holds a substantial $964 million. According to crypto derivatives provider Greeks Live, the ongoing market weakness has turned the $60,000 level into a highly contested battleground. However, they also highlighted that a sluggish market could present new trading opportunities, making it an ideal environment for building medium- to long-term calls at lower prices.
In addition to Bitcoin, today also brings the expiry of 212,000 Ethereum options, with a put/call ratio of 0.4 and a max pain point of $2,450, contributing a total notional value of $510 million to the week’s options expiry. This brings the total crypto options expiry value for October 11 to $1.6 billion, underscoring a busy day in the cryptocurrency derivatives market.
Market Reaction and Sentiment
Amidst these expirations, spot markets have faced a 1.4% decline, bringing the total market capitalization down to $2.21 trillion. Bitcoin struggled, dipping to $58,900 late Thursday, before experiencing a slight recovery to $60,500 in early Friday trading. Despite these fluctuations, Bitcoin has seen an 8% drop since late September, casting doubt on the anticipated “Uptober” phenomenon, where traders expected a bullish market rally.
Ethereum has faced similar challenges, plummeting to $2,335 before bouncing back slightly to $2,400. Market fears have been exacerbated by rumors regarding the Chinese government potentially liquidating a significant stash of ETH that was previously seized from the PlusToken Ponzi scheme.
What Lies Ahead?
As traders digest the implications of today’s substantial options expiry, the market remains in a delicate balance. The interplay between the ongoing market conditions, investor sentiment, and upcoming expiration events will likely dictate the short-term trajectory of Bitcoin and Ethereum prices. For now, traders must navigate the complexities of a market that is both ripe with opportunity and fraught with uncertainty.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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