As Bitcoin’s price hovers around the $64,000 mark, the cryptocurrency market braces for a significant event: the expiry of $1.96 billion worth of Bitcoin options contracts on March 1. This event, representing approximately 32,200 contracts, is the second-largest expiry of the month, with another substantial expiry of over $6 billion scheduled for the end of March.
Traders are closely watching the dynamics of this options expiry, particularly given the prevailing sentiment in the derivatives market. The put/call ratio stands at 1.49, indicating a higher number of sellers of short contracts (puts) compared to longs (calls). This suggests a prevailing inclination among derivatives traders towards a market correction. The “max pain point,” the price level at which most losses are expected upon expiry, is identified at $55,000, further indicating the bearish sentiment among traders.
Noteworthy strike prices in the options market include $60,000 and $65,000. At the $60,000 strike price, there are 15,329 calls with a notional value of $934 million, indicating significant bullish sentiment. Conversely, at the $65,000 strike price, there are 14,137 calls with a notional value of $861 million.
Deribit, a leading crypto derivatives provider, reports an all-time high in open interest, which surpassed $29 billion on February 29. Additionally, the platform witnessed a record 24-hour trading volume of $12.4 billion, underscoring the heightened activity in the derivatives market.
Beyond Bitcoin, the expiry of 235,000 Ethereum contracts, with a notional value of $793 million, is also noteworthy. The put/call ratio for Ethereum contracts stands at 0.88, indicating a more balanced distribution between long and short positions.
In terms of market outlook, the broader cryptocurrency market has experienced a slight retreat, with total capitalization currently at $2.37 trillion. Bitcoin has retraced to $60,878, while Ethereum follows suit, dipping to $3,372. This correction comes after a period of significant rallying in the markets.
While the options expiry event looms large, its direct impact on spot markets may be limited. The prevailing sentiment suggests that a correction is due, irrespective of the expiry event. As such, market participants are anticipating further downward pressure in the near term.
In conclusion, the $2 billion Bitcoin options expiry event presents a pivotal moment for the cryptocurrency market. Traders are closely monitoring the dynamics of the derivatives market, with prevailing sentiment pointing towards a correction. However, the broader market outlook suggests that the expiry event may not significantly alter the trajectory of the ongoing correction.
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