Critical Bitcoin Options Expiry Event Approaching
Approximately 18,000 Bitcoin options contracts are set to expire on July 5, carrying a total value of about $1 billion.
This expiry event is notably smaller in scale compared to the significant end-of-quarter contract expiry observed the previous Friday.
Key Insights into Bitcoin Options Expiration
As of today, the batch of BTC derivatives reveals a put/call ratio of 0.65, indicating that nearly twice as many long (call) contracts will be expiring in comparison to short (puts) contracts.
- The maximum pain point, where the most losses are anticipated, stands at $61,500, a level considerably above the current spot prices following a recent substantial market decline.
- There is substantial open interest at higher strike prices, with $532 million at $90,000 and $665 million at $100,000 based on data from Deribit.
- While there is still significant open interest at higher strike prices, bears are gaining momentum, causing open interest to rise at lower strike prices.
Market Sentiment Reflection
Following the quarterly delivery, the market experienced significant volatility, leading to a notable increase in major term IVs (implied volatility), providing institutional sellers a prime opportunity to establish positions.
The prevailing market sentiment is marked by increased pessimism, as evidenced by the rising IV of put options on BTC & ETH, along with an inverted term structure of far-low and near-high.
Implied volatility serves as a metric for anticipating future volatility based on expiring contracts, particularly during periods of pronounced market movements.
Ethereum Options Expiration and Market Outlook
Alongside the expiring Bitcoin options, approximately 164,000 Ethereum options are also set to expire. These Ethereum options exhibit a put/call ratio of 0.36, with a max pain point at $3,350 and a total value of $470 million.
The broader state of the crypto markets is characterized by a significant downturn, marking the lowest levels observed since late February, with the total market capitalization dropping 8.6% in a day to $2.08 trillion.
- Significant liquidations amounting to $675 million have occurred within the past 24 hours, as per Glassnode data.
- Around $350 million has exited the crypto market throughout the week, representing the most substantial decline since early April.
- Bitcoin witnessed a 7% decline, slipping below $54,000 on July 5, coinciding with Mt. Gox redemption transfers and ongoing Bitcoin movement by the German government.
- Ethereum experienced a more pronounced decline of 10% to reach $2,850 during Asian trading on Friday, with numerous altcoins plummeting by double digits on the same day.
Hot Take: Navigating the Crypto Landscape
As the critical Bitcoin options expiration date approaches, the market’s dynamics are poised for potential shifts based on the outcomes of these expiring contracts. Traders and investors must closely monitor the evolving situation to adapt their strategies accordingly.
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