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Bitcoin, Ether Volatility Looms Large: $15 Billion Options Expiry Could Shake Crypto Markets

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  • Bullish price volatility is predicted to be driven by the forthcoming quarterly expiry of contracts worth billions of dollars in options on Bitcoin and Ether.
  • Deribit, which controls over 85 percent of the global crypto options market, is about to close one of its largest contract batches to date.

Massive quarterly contracts worth billions of dollars in Ethereum (ETH) and Bitcoin (BTC) options are about to expire. The world’s largest cryptocurrency options market, Deribit, is slated to settle quarterly contracts worth an astounding $15.2 billion on Friday at 08:00 UTC.

This amount includes $9.5 billion in Bitcoin options, or 62% of the total notional open interest that is scheduled for settlement. The remaining portion is made up of Ethereum options.

Deribit Leading the Way in Market Movements

As a significant milestone in Deribit history, this expiry removed 43% and 40% of the total notional open interest for Ethereum and Bitcoin, respectively.

Luuk Strijers, Chief Commercial Officer of Deribit, delineated a substantial upsurge in the number of in-the-money options contracts outstanding that were envisaged to propel the market to new heights.

Call options ending in the money promised yield at maturity since they permit owners to procure Bitcoin at a discounted rate relative to the prevailing market value. Furthermore, a proliferation of long-term bets intimated participants that the cryptocurrency would appreciate significantly before those contracts.

Surge in Profitable Options

This favorable position represents an astounding $3.9 billion worth of Bitcoin options, or 41% of the total quarterly open interest. With 15% of its entire quarterly open interest scheduled to expire in the money, Ethereum is not far behind.

Source: Deribit

The concept of “max pain,” which denotes the price at which option buyers stand to lose the most, may cause a reorganization of market dynamics. This expiry might potentially trigger a bullish momentum in the market by easing some of the downward pressure associated with lower maximum pain points.

Head of International Distribution at FRNT Financial, David Brickell, predicts increased market volatility as a result of hedging, particularly from dealers or market makers.

The $70,000 Bitcoin strike is expected to produce high volatility as the expiration date approaches due to traders’ gamma positioning, predicting large market swings.

Meanwhile, the Bitcoin price has climbed slightly in the last 24 hours and 7 days, by 0.52% and 4.86%, respectively, to $70,542.58.

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Syofri is an active forex and crypto trader who has been diligently writing the latest news related to the digital asset sector for the past six years. He enjoys maintaining a balance between investing, playing music, and observing how the world evolves. Business Email: [email protected] Phone: +49 160 92211628