$3.4 Billion Bitcoin Options Expiry: Will it Amplify Selling Pressure?

Options Expiry Impact

As Bitcoin options expire today, concerns arise over their potential contribution to existing selling pressure. With Grayscale's ongoing offloading and miners selling, the market is already under strain. The question now is whether the massive $3.4 billion Bitcoin options expiry will exacerbate the situation.

Significant Expiry Event

This Friday marks a notable end-of-month expiry event, featuring around 93,600 Bitcoin options contracts set to expire. The notional value of this batch is a substantial $3.4 billion, as reported by Deribit. The put/call ratio stands at 0.51, indicating twice as many calls or long contracts being sold compared to puts or short contracts.

Bitcoin OI by expiry. Source:Deribit

Key Strike Price Dynamics

Despite a considerable open interest at the $50,000 strike price, holding 22,719 call contracts, the short-term trend suggests potential profits for short sellers, particularly with the highest put contract open interest at the $40,000 strike price.

Options Trading Insights

Greeks Live highlighted that block trades, comprising both block calls and block puts, constituted 30% of Bitcoin options trading volume yesterday. Notably, these trades included liquidating block trades and diagonal spreads, indicating a perception among major players of minimal short-term risk but anticipating significant swings before May.

Ethereum Options Expiry

Alongside Bitcoin, 931,610 Ethereum options contracts are also set to expire today, with a notional value of $2.07 billion and a put/call ratio of 0.31. This suggests a bearish outlook for Ethereum as sellers of long or call contracts outnumber those selling short or put contracts.

Market Snapshot

Crypto markets have experienced a 0.5% gain over the past 24 hours, reaching a total valuation of $1.64 trillion. However, the short-term trend remains downward as markets undergo correction from the recent mid-cycle rally.

Asset Performance

Bitcoin prices reclaimed $40,100 during the Asian trading session, while Ethereum prices were at $2,224, reflecting a 0.5% increase. However, Ethereum has witnessed a 10% decline over the past week.

Selling Pressure Dynamics

Selling pressure on Bitcoin, driven by Grayscale and miners, continues to dominate, maintaining control in the bears' favor. Additionally, Celsius' significant movement of ETH to exchanges, in preparation for distribution to creditors, contributes to downward pressure on Ethereum markets.

Conclusion

As the cryptocurrency market navigates the intricate landscape of options expiry, ongoing selling pressure from various sources prompts cautious observation. The impact of these expiries on market dynamics will unfold in the coming days, influencing the trajectory of both Bitcoin and Ethereum prices.