Selling Pressure on the Verge
In the impending weekly option expiry, approximately $5.82 billion in Bitcoin and Ethereum options is nearing its expiration. This could have a significant impact on the market for February.
The breakdown of these options reveals a trend where Bitcoin has a put/call ratio of 0.52, showing a high interest in call options. The max pain point for Bitcoin is at $41,000, with a substantial open interest above $361 million at the $50,000 strike price.
As the current BTC price is below the max pain point, there is growing concern about increased selling pressure. Investors holding call options may face losses, leading to more selling pressure as they try to minimize losses or cover their positions.
$200M Ethereum Calls at Risk
Ethereum options present a different picture with a relatively lower put/call ratio of 0.31 and a max pain point set at $2,300. There’s a significant open interest of about $200 million near the $2,400 price mark, indicating potential losses for call holders.
With Ethereum currently trading well below its max pain point, this indicates a likelihood of increased selling pressure in the upcoming hours. This scenario could trigger extensive liquidations in the market.
However, this is generally favorable for option writers (sellers) as they get to keep the premium paid by the option buyers without having to deliver the underlying asset or pay out cash.
Hot Take
The impending expiration of nearly $5.8 billion worth of Bitcoin and Ethereum options could result in significant market volatility, particularly considering the level of open interest and the current market positions. As the market is below the max pain points for both cryptocurrencies, there is a looming concern for heightened selling pressure and potential further market downturns.
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