The cryptocurrency market is gearing up for a significant event as around 89,000 Bitcoin options contracts are due to expire on Friday, Sept. 27. These BTC derivatives have a notional value of approximately $5.8 billion, making this options expiry a crucial moment for the market.
Impact on Markets
Today’s options expiry is particularly noteworthy due to the end of the month and the end of the third quarter, which could potentially impact spot markets. The spot markets have been on the rise this week, and the outcome of this massive batch of Bitcoin options contracts could have a significant effect on the overall market sentiment.
The put/call ratio of the current options contracts stands at 0.64, indicating that there are more long (call) contracts expiring than short (put) contracts. The max pain point, which is the price at which most losses will be incurred, is set at $59,000, approximately $6,000 below the current spot prices.
Open interest, which refers to the value or number of open options contracts yet to expire, is high at the $70,000 strike price with $872 million. Additionally, there is substantial open interest at higher strike prices, with $910 million at $90,000 and over a billion dollars at the $100,000 strike price, as reported by Deribit.
Predictions for the Future
Greeks Live, a crypto options tooling provider, has commented on the recent rally in the asset class, attributing it to the Federal Reserve’s 50 basis point rate cut, which has boosted market confidence significantly. The firm has predicted a bullish fourth quarter for the crypto markets, citing several tailwinds that could drive further growth.
The upcoming US election and anticipated rate cuts are expected to create ample trading opportunities in the fourth quarter. Historically, the fourth quarter has been a strong period for the crypto markets, and with the current market conditions, there is optimism for continued growth in the coming months.
Quarterly Delivery Effects
The quarterly delivery of these options contracts will bring about a large number of shifting positions and margin releases, according to Greeks Live. Major term implied volatility levels are currently low, with expectations of further downward pressure after the quarterly delivery. This presents traders with an opportunity to position themselves for the fourth quarter as market conditions evolve.
Ethereum Options Expiry
In addition to the significant Bitcoin options expiry, there are around 718,000 Ethereum options set to expire with a notional value of $1.9 billion. These derivatives have a put/call ratio of 0.47 and a max pain point of $2,500. The total value of the crypto options set to expire on Friday amounts to $7.7 billion, making it the largest expiry event since the end of March.
Market Performance
As the options expiry date approaches, the cryptocurrency market has seen a 1.4% increase, reaching a total capitalization of $2.37 trillion. Bitcoin surged to a two-month high of $65,700 before retracing to $65,300 during the Friday morning Asian trading session. Ethereum also experienced a slight pullback after failing to break resistance above $2,650.
In Conclusion
The upcoming options expiry event for both Bitcoin and Ethereum is poised to have a significant impact on the cryptocurrency market. With high open interest levels and a bullish outlook for the fourth quarter, traders are closely monitoring the market dynamics to capitalize on potential opportunities. As the market continues to evolve, it will be interesting to see how the options expiry influences price movements and market sentiment in the coming days.
