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Cryptocurrency News Articles
Bitcoin and Ethereum Options Worth $7.7B Expire Today, Market Braces for Price Volatility
Sep 29, 2024 at 07:19 am
The cryptocurrency market is on edge as approximately $7.7 billion worth of Bitcoin and Ethereum options are set to expire today.
The cryptocurrency market is bracing itself as approximately $7.7 billion worth of Bitcoin and Ethereum options are set to expire today, an event that has traders and analysts on high alert for any potential price volatility.
A Closer Look at the Options Expiry
This batch of expiring options includes $5.8 billion in Bitcoin options and $1.9 billion in Ethereum options, making it one of the largest expiries in recent months. According to data from Deribit, a major crypto options exchange, a total of 89,037 Bitcoin options contracts will expire, up significantly from the 20,037 contracts expiring last week.
For Ethereum, 719,130 contracts are expiring today, with the options market reflecting strong bullish sentiment among traders. The put-to-call ratio for Bitcoin is 0.64, indicating a balanced market with a slight preference for call options. In contrast, Ethereum’s put-to-call ratio is 0.47, suggesting even greater bullish expectations.
Understanding Maximum Pain Points
The concept of “maximum pain” refers to the price point at which the most options contracts expire worthless, causing maximum losses for both buyers and sellers. For Bitcoin, this point is estimated to be around $59,000, while Ethereum’s maximum pain level is slightly higher at $2,550. Analysts believe that as these options settle, prices may hover around these critical thresholds, potentially leading to increased volatility.
Market Context: Recent Trends and Expectations
The expiration of these options follows a strong rally in the cryptocurrency market. Since the Federal Reserve announced a 50-basis-point interest rate cut on September 18, Bitcoin has seen its price rise from $57,000 to around $65,075, while Ethereum has climbed from $2,278 to $2,625. This bullish trend has generated immense interest among traders, leading to expectations of continued momentum.
Greeks.live, a prominent analytics firm, highlights the significance of the recent rally on this third-quarter delivery day: “The market has rallied strongly over the last three weeks, mainly due to the Fed cutting rates, which has increased confidence. Historically, Q4 tends to be good for crypto, especially with the U.S. election and potentially further rate cuts on the horizon.”
Caution Amidst Optimism
Despite the optimistic outlook, traders are advised to exercise caution. Options expiration events have historically been known to cause short-term market instability. As traders reposition themselves for the fourth quarter, the possibility of sudden price movements remains high.
“Volatility is expected as the market digests the expiring options,” analysts noted. “How Bitcoin and Ethereum prices react in the aftermath of this event could influence the sentiment for the coming weeks.”
A Pivotal Moment for Crypto
As the crypto market grapples with the implications of $7.7 billion in expiring options, the next few days will be critical in determining whether Bitcoin and Ethereum can continue their upward trajectories or if a corrective phase is on the horizon. Market participants will be closely monitoring how price dynamics unfold in the wake of this significant event.
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!
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