The year 2023 has been a rollercoaster for crypto investors, with Bitcoin (BTC) surging over 160%. As we approach 2024, anticipation grows for the launch of the first U.S. spot Bitcoin ETF, with Bitcoin remaining a favorite among investors. However, an increase in volatility is expected in the crypto market today.
December 29 marks the expiration of the last Bitcoin options for 2023, a significant event for the crypto options market. Data from Greeks.Live indicates that options contracts equivalent to approximately 178,000 BTC are set to expire, with a Put Call ratio of 0.67. The options’ maximum pain point is at the $33,000 level, representing a substantial conceptual value of $7.59 billion.
Today’s expiration of $11 billion worth of Bitcoin options signifies a notable peak compared to last year’s $9.8 billion total position on the corresponding annual expiry date. This volume is more than double the annual expiry volume observed at the same time last year.
Despite typically low volatility at year’s end, the crypto market may experience a shift to higher volatility due to expectations of the SEC’s approval of a Bitcoin ETF in January. The current Implied Volatility (IV) level remains relatively stable, thanks to the anticipated ETF developments next month.
The crypto options and derivatives market has seen a noticeable influx of institutional investors in 2023, leading to an increase in interest. This has resulted in a maturing market that accommodates a broader strategy and product range, catering to diverse participants and trading approaches.
Financial heavyweights like BlackRock are preparing for the SEC’s approval of spot Bitcoin ETF applications, expected around January 10, 2024. Recent amendments to the S-1 forms for spot ETF applications by Ark Invest and 21Shares indicate rising market expectations for potential approval. Meanwhile, BTC trades around $43,000, with some analysts seeing any significant dips as buying opportunities.
