A large number of Bitcoin (BTC) and Ethereum (ETH) options are expiring today. Let’s figure out how this will affect the price of underlying assets.
Cryptocurrency options – derivative contracts that allow traders to buy or sell an asset at a specific price on a specific expiration date. If the option owner decides not to buy or sell cryptocurrency, he is not obligated to do so. This makes options more flexible than futures, which require you to close a position regardless of profit or loss.
The notional value of the soon-expiring 22,000 BTC contracts and 156,000 ETH contracts is $560 million and $250 million, respectively. We are looking into whether expiration can provoke increased volatility in the market and affect the price of the two largest cryptocurrencies by capitalization.
The options market is still calm
According to Greeks.livethe ratio of put and call options on BTC remains at 0.74.
The maximum pain point is at $26,000. This is the price at which the asset will cause financial losses to the largest number of holders.
The Ethereum options put/call ratio is 1.09 and the maximum pain point is $1,650.
Greeks.live analysts believe that the coming days will be marked by a continuation of the sideways movement:
What will happen to the price of BTC and ETH during expiration?
There has been some recovery in the crypto market this week: after consolidating above $26,000, the price of the main cryptocurrency made several attempts to break through to the next resistance at $26,800. At the time of writing, BTC is trading at $26,630.
The dynamics of Ethereum, meanwhile, look much weaker. Over the week, the asset lost 1% in price, dropping to $1,633.
It is quite difficult to predict how the market will behave on the expiration day of a large number of contracts. Especially if any events are added to it that affect the news background. However, traders need to closely monitor the situation to ensure that increased volatility does not lead to unwanted stop loss orders or poor trading decisions.
We should not forget that the impact of option expiration on the price of the underlying asset is short-term in nature. As a rule, the very next day the market will return to its normal state, and strong price deviations will be compensated.
Source: Cryptocurrency
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