Cryptocurrency markets are bracing for a potential shakeup as $2.7 billion worth of Bitcoin (BTC) and Ether (ETH) options contracts are set to expire on Friday. This expiry event, closely watched by traders, could influence the price movements of both digital assets in the coming days.
The options contracts expiring on Deribit, a leading crypto options exchange, represent wagers on the future price of Bitcoin and Ether. These contracts grant holders the right, but not the obligation, to buy or sell the underlying asset at a predetermined price by a specific date.
Currently, both Bitcoin and Ether are trading below the “maximum pain” levels associated with the expiring options contracts. This theory suggests options sellers strategically manipulate the market price towards a level that inflicts the most losses on options buyers.
Analysts at Coindesk, a cryptocurrency news platform, report that a significant number of put options are “in-the-money” for both Bitcoin and Ether. Put options grant holders the right to sell the asset at a specific price. With the current market price below the strike price of these in-the-money options, holders are positioned to profit if they exercise their options before expiry.
The upcoming expiry event could trigger increased volatility in the Bitcoin and Ether markets. Depending on the strategies employed by major options holders, prices could fluctuate as they jockey to influence the underlying asset’s price and maximize their profits.
Market participants are closely monitoring the situation, with some analysts predicting a potential price surge for both Bitcoin and Ether if options sellers attempt to push the price closer to the maximum pain levels. However, others remain cautious, considering broader market conditions and potential selling pressure from expiring options contracts.
The coming days will be crucial for cryptocurrency markets as the $2.7 billion options expiry unfolds. Whether it translates to significant price movements or a more muted event remains to be seen.
