Prepare for Increased Volatility: BTC and ETH Options Expire Soon
Get ready for a surge in market activity as a substantial amount of Bitcoin (BTC) and Ethereum (ETH) options are set to expire on April 12, 2024. With 21,000 BTC contracts and 230,000 ETH contracts expiring, totaling $1.5 billion and $800 million in notional value, how will this expiration impact the crypto market?
Has Volatility Returned to the Crypto Market?
- The BTC put-to-call ratio stands at 0.62, with a maximum pain point at $69,000.
- Ethereumโs put-to-call ratio is 0.49, and its maximum pain point is $3,425.
Analysts have observed increased volatility in the crypto market this week, with Bitcoin and Ethereum balancing around $70,000 and $3,500, respectively. Short calls are emerging as the dominant trades leading up to the expiration date.
The recent halving event has exceeded expectations, with a slowdown in ETF inflows leading to more subdued sentiment. Analysts recommend selling in the medium term as the halving approaches.
Bitcoin has seen significant price fluctuations this week, trading between $66,000 and $72,000 before settling at $70,900 at the time of writing.
Understanding Crypto Options Trading
- Crypto options are derivative contracts allowing traders to buy or sell assets at a specific price on a particular expiration date.
- Option owners have the flexibility to choose whether or not to execute the trade, unlike futures contracts that require mandatory closure.
Itโs challenging to predict market behavior on expiration days, especially with external events impacting the news cycle. Traders and investors must monitor the situation closely to avoid unwanted stop-loss orders or impulsive trading decisions due to heightened volatility.
Remember, the impact of option expiration on asset prices is typically short-lived. Markets tend to normalize the following day, correcting any drastic price fluctuations.
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