How Will Crypto Markets React to $2B Bitcoin Options Expiry?

With the asset tapping $64,000 this week, will the big expiry event push Bitcoin prices higher or initiate a correction?

Around 32,200 Bitcoin options contracts will expire on March 1. This week’s expiry event is the month’s second-largest as another huge one – worth $6 billion-plus – will occur at the end of March.

The notional value of today’s expiring Bitcoin options is $1.96 billion, according to crypto derivatives provider Deribit.

Big Bitcoin Options Day

Moreover, the put/call ratio is 1.49, which means there are more sellers of short contracts (puts) than longs (calls). This suggests that derivatives traders are leaning towards a market correction. The max pain point, or the price at which most losses will be made upon expiry, is $55,000.

The $60,000 strike price remains hugely significant, with 15,329 calls and a notional value of $934 million at this point. Additionally, the put/call ratio here is just 0.20, meaning the bulls vastly outnumber the bears who are shorting at this strike price.

There is also a lot of interest at the $65,000 strike price with 14,137 calls with a notional value of $861 million, according to Deribit.

Bitcoin open interest (OI) by expiry. Source: Deribit

Deribit also reported an all-time high in open interest, which passed $29 billion on Feb. 29. Open interest refers to the total number of open derivative contracts, such as options or futures, that have not been settled.

“Our 24-hour trading volume hit $12.4 billion this morning, the final all-time high,” it noted.

Crypto derivatives software provider Greeks Live reported that clients traded $620 million in options volume on Feb. 29, a record high for the platform.

The clients have traded $620 million in options volume over the past 24 hours through the https://t.co/Gv7LZUc65y, a record high daily volume that still accounts for nearly 10% of total deribit volume during peak trading hours!
Thank for your support! We are committed to…

— Greeks.live (@GreeksLive) February 29, 2024

In addition to the big batch of Bitcoin options expiring today, 235,000 Ethereum contracts are also expiring. These have a notional value of $793 million and a put/call ratio of 0.88, meaning that long and short sellers are more evenly matched.

Crypto Market Outlook

Crypto markets have retreated a little, with total capitalization currently at $2.37 trillion.

Bitcoin has pulled back to $60,878 at the time of writing, and a further correction looks likely. Ethereum has also dipped to $3,372 as it follows Big Brother, and markets cool after a week of rallying.

It is unlikely that that the options expiry will have much impact on spot markets, which are due for a correction.

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