Massive $14.6B Bitcoin and Ether Options Expiry Shows Bias for Bitcoin Protection
There is a moment coming in the crypto world that can decide the mood of the entire market. The Bitcoin and Ether Options expiry worth $14.6 billion in the derivatives market on Friday is a big news for investors. This expiry is not only a financial event but also a signal of the direction in which the trust of traders and investors is going.
Bitcoin Options Expiry and Downside Protection
This time the options expiry is more focused on Bitcoin. Data says that the demand for Bitcoin put options is very high, which clearly shows that investors want downside protection. Meaning if the market falls then their loss should be limited. This is a kind of insurance through which traders secure their funds.
As of now, 56,452 BTC call option contracts and 48,961 put option contracts are due for settlement. This creates a total open interest of $11.62 billion. According to Deribit exchange, which is the world’s largest crypto options platform and handles 80% of global activity, this is going to be a massive expiry.
Market experts are saying that near-the-money puts, which are around BTC’s current price of around $110,000, are in the highest demand among investors. This means that people are cautious about the short-term decline, but higher strike price calls are also present, which shows a hope that the price of Bitcoin can go higher in the future.
Ether Options Expiry Looks More Neutral
If we talk about Ether options expiry, it looks a bit more balanced. Total 393,534 calls and 291,128 puts are ready for settlement, which creates a notional open interest of $3.03 billion.
The sentiment of ETH is different from BTC, as the demand for calls for Ether is more than puts. The highest OI strikes are at $3,800, $4,000 and $5,000. Meaning traders expect ETH to touch these levels. On the other hand, put options are more concentrated at $4,000, $3,700 and $2,200 which highlight risk management.
Deribit said in its official statement: “BTC expiry points to persistent demand for downside protection, while ETH looks more neutral. Combined with Powell’s Jackson Hole signal, this expiry may help set the market tone for September.” Meaning the mood of crypto for the next month can be decided by this expiry.
Understanding Bitcoin and Ether Options
Now for a little clarity, what are the options? Options are a derivative contract that gives the buyer the right to buy or sell a specific asset at a fixed price before a future date.
- Call option means that the buyer is bullish and he feels that the price will go up.
- Put option is like an insurance that gives protection against price fall.
The options market has grown a lot since 2020. Now monthly and quarterly settlements have become a big thing which impacts the market movement.
Max Pain Theory in Bitcoin and Ether Expiry
At the time of Options expiry, another concept comes to the fore which is called Max Pain Theory. According to this theory, the price settles around the strike levels near expiry where most traders suffer losses.
At present, the maximum pain level of Bitcoin is $116,000 and that of Ether is $3,800. Meaning, if this theory is valid, then the prices can settle around these levels near expiry. But market experts say that there are still debates on this theory and it is not proven right every time.
What This Bitcoin and Ether Options Expiry Means for Investors
This whole scenario has a clear message. Bitcoin investors are still planning to avoid the downside and are more cautious. On the other hand, the sentiment of Ether is relatively balanced where people are moving with optimism.
This expiry is not just a short-term event but will also set a direction for the coming months. Global events like Powell’s statements at Jackson Hole and macroeconomic situations will also affect the sentiment of crypto.
For now, all the traders and investors who are in the crypto market, it is important for them to understand that options expiry is a big moment which decides the short-term and sometimes long-term moves of the market.
Disclaimer:
This article is for informational purposes only. The views and analysis given in it are not financial advice. Cryptocurrency investments come with high risk, so do your proper research or consult a financial advisor before making any decision.
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