Bitcoin Options Expiry Impact on Market Sentiment: Sept 13 Analysis
As the cryptocurrency market gears up for the expiry of around 23,000 Bitcoin options contracts on Friday, Sept. 13, traders and investors are closely watching the potential impact on market sentiment. With a notional value of approximately $1.34 billion, this week’s options expiry event is significantly larger than last week’s, suggesting that the effects on the crypto spot markets could be more pronounced.
Put/Call Ratio and Open Interest
The put/call ratio for this week’s batch of Bitcoin options contracts stands at 0.86, indicating that there are slightly more long (call) contracts expiring than short (put) positions. However, the ratio suggests that these positions are relatively evenly matched, potentially leading to a balanced impact on market sentiment. Open interest, which represents the value of open contracts yet to expire, remains high at strike prices of $70,000 and $75,000, with $627 million and $638 million in open interest, respectively, according to Deribit.
Furthermore, there is substantial open interest at higher strike prices, with $751 million at the $90,000 level and a staggering $930 million at the $100,000 strike price. These levels indicate strong interest and potential price movements as the options contracts expire.
Market Analysis and Volatility Expectations
Crypto derivatives provider Greeks Live noted that the week leading up to the options expiry event has been relatively stable, with events such as the US presidential debate and macroeconomic data like CPI failing to generate significant volatility. Additionally, expectations of a Federal Reserve rate cut in the following week are gradually converging, with a high probability of a 25 basis points cut and a lower chance of a 50 bps cut, according to the CME Fed Watch tool.
Despite the stable market conditions, options data show a decline in implied volatility across major terms, indicating that market volatility expectations have fallen short. The market theme for September continues to oscillate, reflecting the uncertainty and cautious sentiment among traders and investors.
Ethereum Options Expiry and Market Sentiment
In addition to Bitcoin options, there are approximately 126,700 Ethereum options contracts set to expire with a notional value of $299 million. These derivatives have a put/call ratio of 0.73, similar to the previous week’s expiry event. The market sentiment for Ethereum remains cautious, mirroring the sentiment in the broader cryptocurrency market.
Bitcoin and Ethereum Price Movements
Bitcoin has experienced price fluctuations, ranging from an intraday low of $57,300 to around $58,400, without making significant progress above resistance levels. Despite the volatility, Bitcoin has recovered from its recent lows below $54,000 and is currently trading in a tight range-bound pattern. Ethereum, on the other hand, has been trading within a narrow channel between $2,320 and $2,360 for most of the week.
Overall Market Capitalization and Altcoin Performance
The total market capitalization of the cryptocurrency market has remained flat at $2.13 trillion over the past 24 hours. While Bitcoin and Ethereum have struggled to break out of their respective trading ranges, altcoins have mostly been in the red. However, XRP and Toncoin (TON) have managed to make significant gains of around 3%, bucking the trend of the broader market.
Conclusion
As the cryptocurrency market braces for the expiry of a substantial number of Bitcoin and Ethereum options contracts, traders and investors remain cautious about the potential impact on market sentiment. With open interest concentrated at key strike prices and declining implied volatility, the market theme for September continues to be uncertain. As Bitcoin and Ethereum navigate price fluctuations and resistance levels, the broader market remains in a state of flux, waiting for clearer signals to determine the direction of the next major trend.