Massive Bitcoin Options Expiry Approaches

The cryptocurrency market is bracing for a significant event: the expiration of a substantial amount of Bitcoin and Ethereum options contracts. 

According to the latest data from Greeks.live, 37,000 Bitcoin options with a notional value of $1.58 billion and 268,000 Ethereum options valued at $610 million are set to expire. This event comes amidst a recent downturn in the crypto market, with Bitcoin notably dropping to $40,000 at one point during the week.

Deciphering the data 

The current put-call ratio for Bitcoin options stands at 1.02 with a Maxpain point of $42,000. For Ethereum, the put-call ratio is 0.66, with a "maxpain" point of $2,250. 

Simply put, the put-call ratio compares the trading volume of put options to call options. A ratio greater than 1 indicates more puts (options to sell) than calls (options to buy), suggesting a bearish sentiment among traders. 

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The max pain point represents the price at which the highest number of options would expire worthless, potentially indicating the level where the asset might stabilize. Despite the pullback, the majority of the trades are still focused on Bitcoin options. 

Interestingly, the implied volatility (IV) has been relatively stable for almost a month, suggesting a period of market consolidation.

Traders eye $50,000 Bitcoin 

In the meantime, options traders are increasingly betting on a Bitcoin resurgence. Data from Deribit, the leading crypto options exchange, reveals that the largest open interest lies in the call options for Bitcoin at $50,000, expiring on January 26. 

This surge in interest aligns with the anticipation of the U.S. Securities and Exchange Commission potentially allowing exchange-traded funds to hold Bitcoin directly. 

Since mid-October, Bitcoin has seen a significant increase of over 60% in its value. This renewed bullish sentiment is underpinned by expectations of a shift in the Federal Reserve's monetary policy and the high likelihood of a Bitcoin ETF launch.