37,000 Bitcoin Options Set to Expire Today with $2.4 Billion Notional Value

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On Friday, August 2, approximately 37,000 Bitcoin options contracts worth around $2.4 billion are set to expire.
This expiration event is slightly smaller than the one at the end of last month but is more significant than the average expiry.
The put/call ratio for these BTC derivatives is 0.58, indicating there are almost twice as many long (call) contracts as short (put) ones, with the max pain point at $66,000.

This article delves into the implications of the impending Bitcoin and Ethereum options expiry, examining the potential impacts on the broader crypto market.

Bitcoin Options Expiry Overview

The upcoming expiration of 37,000 Bitcoin options contracts brings a notional value of $2.4 billion. This event is notable, although it’s slightly smaller than the recent end-of-month expiration event. The options contracts show a put/call ratio of 0.58, meaning there are almost twice as many long or call contracts set to expire as there are short, or put, contracts. The point of maximum pain, where the majority of losses will occur, is set at $66,000, which is significantly higher than the current spot prices. Open interest remains notably high at the $70,000 strike price, reaching $846 million.

Market Conditions and Volatility

Crypto derivatives provider Greeks Live observed that the market has been relatively weaker this week, exacerbated by underwhelming performance in Ethereum ETFs. Nonetheless, significant events have concluded without major disruption, resulting in a decrease in implied volatility. Deribit’s forward-looking Bitcoin volatility index (DVOL) has seen a significant drop of nearly 15% from 62% to 48% since the end of July, highlighting a calmer market environment ahead.

Ethereum Options Expiry

Beyond Bitcoin, around 180,000 Ethereum options are also nearing expiration, with a notional value of $600 million. This brings the total notional value of expiring crypto derivatives to a substantial $3 billion. Ethereum’s options maintain a put/call ratio of 0.55 and feature a max pain point of $3,300. The expiry of these contracts will likely exert noticeable influence on ETH market dynamics in the coming days.

Broader Crypto Market Impact

The overall cryptocurrency market has experienced a 4.8% decline this week, dropping to a total market capitalization of $2.41 trillion by Friday. Bitcoin, having reached as high as $70,000 on July 29, has retracted by 8% to $64,250 as of Friday morning in the Asian trading session, following a brief dip to an intraday low of $62,400 on August 1. Ethereum has similarly been on a downward trend, falling 7% since Monday to trade at $3,155. Despite this, spot ETF flows for Ethereum have turned positive as of August 1, with an aggregate inflow of $26.7 million.

Looking Ahead

Greeks Live has concluded that the outlook for the rest of August remains pessimistic. US stocks have been underperforming, and there lacks sufficient positive sentiment to bolster the market in August. The market may have to wait another month or two before seeing any significant recovery. Crypto analysts are closely watching September as the potential turning point for a market rebound, placing it as a month of interest for potential positive shifts.

Conclusion

In conclusion, the upcoming expiration of Bitcoin and Ethereum options contracts marks a significant event in the crypto derivatives market. With high open interest and varying put/call ratios, the impact on both cryptocurrencies will likely be substantial. As market conditions remain subdued, investors and analysts will be closely monitoring these expiries and their ripple effects across the crypto space, with a cautious eye on potential recovery trends later in the year.

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