How Will Crypto Markets Respond to the $2 Billion Bitcoin Options Expiry?

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.

Bitcoin Options Expiry day

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.

Crypto Market Watch

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.