As the largest derivatives expiration of February unfolds, the cryptocurrency market is abuzz with anticipation. Bitcoin and Ethereum options contracts worth a combined total of $8.72 billion are set to expire, creating an atmosphere of unpredictability amid delicate market conditions. This significant expiration event highlights the potential for dramatic shifts within the volatile crypto sphere.
What’s the Impact of Expiry on Market Dynamics?
Bitcoin alone accounts for the lion’s share of this expiration, with 114,705 contracts valued at $7.74 billion, indicating heightened open interest. Ethereum is not far behind, facing the expiry of nearly 479,000 contracts worth approximately $975 million. These figures highlight a substantial portion—approximately 20%—of the total open positions in both cryptocurrencies, suggesting the potential for impactful market movements.
How Are Options and “Max Pain” Levels Affecting Prices?
Currently, both cryptocurrencies are trading below their “max pain” levels. Bitcoin’s current price is $68,052, trailing its max pain threshold of $75,000. Similarly, Ethereum is priced at $2,035, below its $2,200 max pain level. This scenario leaves a significant number of options contracts set to expire worthless, potentially influencing price directions as traders react.
The open interest in call options surpasses that of put options for both assets. For Bitcoin, there are 66,300 calls versus 48,405 puts, while Ethereum sees 268,642 calls against 210,350 puts. This disparity suggests a bullish sentiment among traders, anticipating price increases rather than declines.
Volatility indexes provide further insight into market sentiment. Bitcoin’s DVOL is at 53, indicating volatility levels 87.7% above historical norms. Ethereum’s DVOL registers at 70, meaning its volatility is also heightened, albeit less so compared to Bitcoin.
“Downward price pressure has subsided, though market confidence is far from fully restored,” noted the Greeks.live team. They observed an increase in call buying, especially in medium- to long-term options.
Recent data indicates a decrease in the 25-delta skew for both cryptocurrencies, which had hit as low as -30, signifying earlier market fears. Current readings in the -8 to -9 range suggest eased concerns, yet cautious sentiment persists.
With options set to expire, Bitcoin and Ethereum could face upward price pressure, yet trading remains lackluster. The landscape may see reduced volatility and less panic-driven activity as the market digests these expirations.
