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Cryptocurrency News Articles
Bitcoin and Ethereum Brace for Market Volatility as $1.6B Worth of Options Expire Today
Sep 20, 2024 at 10:10 am
This event coincides with the Federal Reserve’s recent decision to cut interest rates by 50 basis points (bps).
Nearly $1.6 billion in Bitcoin (BTC) and Ethereum (ETH) options will expire today, an event that could heighten market volatility. This coincides with the Federal Reserve’s recent decision to cut interest rates by 50 basis points (bps).
According to Deribit data, 20,037 Bitcoin options contracts will expire on September 20, valued at roughly $1.26 billion. These contracts have a put-to-call ratio of 0.85 and a maximum pain point of $58,500.
Meanwhile, Ethereum’s options market will expire with 125,046 contracts, valued at $308.16 million. Today’s expiring Ethereum contracts have a put-to-call ratio of 0.65, with a maximum pain point of $2,350.
In options trading, the maximum pain point is the price level at which option holders would incur the highest losses. It indicates the price at which the highest number of options (both calls and puts) would expire worthless, causing traders the most financial “pain.” On the other hand, the put-to-call ratio gauges market sentiment by comparing the number of put options (bets on price declines) to call options (bets on price increases).
Greeks.live’s recent analysis highlighted the impact of the Fed’s rate cut on today’s expiring crypto options contracts. The analysts noted that the Fed’s move was largely anticipated and aligned with macroeconomic projections.
“Implied volatility declined significantly across all major maturities, with ultra-short-term IVs falling by over 25%, as short-term short-selling expectations by large investors fell short,” they stated.
Looking ahead, Greeks.live also noted that two more interest rate meetings are scheduled for November 8 and December 19 this year, with the market anticipating a total of 100 bps in rate cuts. The next rate cut is expected to coincide with the US election, increasing the potential for heightened market volatility.
BeInCrypto reported that this week's rate cut has positively impacted the crypto market. Following the decision, Bitcoin surged from the $59,000 level to cross the $63,500 mark.
During the same period, Ethereum also experienced a significant increase. According to data, ETH soared from $2,293 to reach as high as $2,482.
However, both assets have now stabilized. At the time of writing, Bitcoin and Ethereum trade at $62,890 and $2,450, respectively.
Despite the positive momentum, traders are advised to proceed with caution. Options expiration has historically been linked to short-term market volatility. The coming days will be crucial in determining whether Bitcoin and Ethereum can sustain their upward trends or if a period of correction is on the horizon.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
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