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Bitcoin and Ethereum face critical test as $9.26 billion in options expire

A large volume of Bitcoin (BTC) and Ethereum (ETH) options, with a notional value of approximately $9.26 billion, expired on April 26, 2024.

This event included 96,172 BTC contracts and 987,000 ETH contracts. This requires analysis to determine its potential impact on the market dynamics and pricing of these digital assets.

Bitcoin and Ethereum Options Worth $9.26 Billion Set to Expire

According to Deribit, the BTC buy/sell ratio remains at 0.68. This means that traders always sell more calls (long contracts) than puts (short contracts).

The maximum pain point (the price at which the asset will cause financial losses for the greatest number of holders) is $61,000 for BTC. However, during the expiration period, Bitcoin reached $64,600.

Learn more: What do you know about digital options trading in the crypto industry?

Open interest by strike price.
Open interest by strike price. Source: Dry bit

Meanwhile, the scenario is a little different for Ethereum. The second largest cryptocurrency has a buy/sell ratio of 0.51 and a maximum sweet spot of $3,100.

Deribit analysts warn traders to be extra vigilant due to the convergence of various factors.

“The expiration is the first monthly expiration since the last halving and could also be affected by gains made this week by some large technology companies, such as Tesla, Meta and Google. Geopolitical tensions persist, as do concerns about further delays in interest rate cuts. All of this, given the “look of strong open interest in Bitcoin and Ethereum options, could mean we’re going to have some fireworks around expiration.” partner Déribit Analysts.

However, upon expiration, price volatility was minimal, with Bitcoin trading in a tight range between $64,200 and $64,600.

Over a broader period, Bitcoin has hovered between $62,000 and $67,000, with its current price around $64,200. Ethereum has reversed this consolidation pattern. This behavior shows the sensitivity of the market to fundamental currents and the importance of strategic trading decisions during options expiration.

What further complicates market forecasts is Dynamics of Bitcoin Exchange Traded Funds (ETFs).

According to For the data From SoSo Value, there was a significant net inflow of $218 million from US Bitcoin spot ETFs as of April 25, 2024. Notable funds such as Grayscale's GBTC, Fidelity's FBTC, and Valkyrie's BRRR recorded notable withdrawals. However, EZBC Franklin Templeton was an exception, recording a net inflow of $1.87 million.

Interestingly, BlackRock's IBIT saw no inflows during the period under review. This represents two consecutive days of IBIT recording no entries.

The movements of these ETFs are critical because they reflect investor sentiment and market liquidity, which can blunt the impact of options expiry or exacerbate price volatility. Net outflows indicate a cautious or bearish attitude on the part of investors, who may prepare for price adjustments after expiration.

Learn more: 9 Best Crypto Options Trading Platforms

However, readers should note that the market typically recalibrates after expiration, thereby stabilizing price trajectories as new positions are created.

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