On October 11, a significant event in the cryptocurrency derivatives market took place with the expiration of approximately 18,800 Bitcoin options contracts, amounting to a notional value of around $1.1 billion. This expiry mirrors the previous week’s conditions, highlighting a decline in implied volatility. As the market matures, these expiry events tend to generate lesser turbulence in spot markets, signifying a more stable trading environment, despite this week’s overall downward trend in prices.
The put/call ratio for the expiring options stands at 0.91, indicating a near balance between bearish and bullish sentiments among traders. This balance often foreshadows a period of consolidation, as traders align their expectations with market realities. The maximum pain point, calculated to be around $62,000, serves as an important benchmark as current spot prices hover around $1,500 lower, suggesting where traders could face the most significant financial losses.
Open interest (OI), representing the total number of outstanding options that have yet to expire, remains substantial at various strike prices. Most notably, the $70,000 strike retains an OI valued at $790 million, while interest at the $80,000 has decreased to $723 million. Amazingly, there is still a staggering $964 million in open interest at the $100,000 strike price. Such figures reveal the substantial bullish interest in Bitcoin, even amid current market pressures.
According to analysis from Greeks Live, the overall market sentiment has been weak, particularly at the critical $60,000 level. The drastic change in the options market, described as “depressed,” is reflective of the traditional trading downturn witnessed in the first two weeks of the fourth quarter. Moreover, the current number of open options represents a historic low for this year, complicating the landscape for traders.
Contrary to these potential bearish signals, there lies an opportunity amid the stagnation. As Greeks Live aptly noted, the subdued market conditions may also present advantageous trading opportunities for investors willing to take the risk. Developing medium to long-term positions at lower price points could yield favorable outcomes down the line, as the market works through its current malaise.
Alongside Bitcoin, Ethereum is also witnessing its own options expiry, with 212,000 contracts nearing expiration, a put/call ratio of 0.4, and a notional value of $510 million. Collectively, these events indicate a total crypto options expiry value of $1.6 billion for the week.
Market Movements
Amid the ongoing churn, the cryptocurrency market’s total capitalization saw a decline of 1.4%, landing at $2.21 trillion. Bitcoin suffered a dip to $58,900 but managed to recover during the Asian trading session, briefly reclaiming the $60,500 mark. This performance illustrates the asset’s volatility and vulnerability, having lost over 8% since the end of September. The anticipated rise known as “Uptober” has yet to unfold. Ethereum faced similar bearish trends, plunging to $2,335 before inching back to over $2,400.
Adding to the unease within the market, uncertainties have arisen surrounding rumors of the Chinese government liquidating a significant Ethereum stash linked to the PlusToken Ponzi scheme. Such fears amplify the already prevalent “Fear, Uncertainty, and Doubt” (FUD) in today’s cryptocurrency ecosystem.
While the market is encountering numerous challenges, a thorough analysis underscores the nuanced dynamics at play in the Bitcoin and Ethereum options landscape, indicating both potential risks and opportunities that market participants must navigate in the coming weeks.
