On May 31, a significant number of Bitcoin and Ether options contracts expired, totaling 69,000 Bitcoin options worth $4.7 billion and 920,000 Ether options worth $3.5 billion. This expiration event has historically led to price volatility in the crypto market.
According to data from Derbit, the put/call ratio for the expired Bitcoin options was 0.61, indicating that more long contracts (calls) expired compared to shorts (puts). On the other hand, Ether options had a put/call ratio of 0.46.
The put/call ratio is a technical indicator that reflects trader market sentiment. A ratio below 0.7 suggests a strong bullish sentiment, while a ratio above 1 indicates a strong bearish sentiment.
The maximum pain point for Bitcoin, where most losses are expected for leverage traders, is at $66,000. For Ether, the max pain point is $3,300. Currently, Bitcoin is trading at $68,210, $2,000 above the pain point, and Ether is trading at $3,738, more than $400 above its pain point.
Looking at the open interest (OI) in BTC options, there is a significant amount of long positions with strike prices at $70,000, $75,000, $80,000, and even $100,000. Open interest refers to the total number of outstanding derivative contracts that have not been settled. The total notional value of all outstanding BTC options contracts is $19 billion.
Some traders have placed long positions on Bitcoin with a target price of $100,000, with $886 million in open interest at this strike price. This indicates a considerable number of long positions.
In May, the approval of the spot ETH ETF by the Securities and Exchange Commission (SEC) was a bullish event for the crypto market. ETH prices rose by 20% in anticipation of the approval. However, the SEC only approved the 19b-4 filing, which delayed the actual listing for trading.
Since the approval, the crypto market has experienced a bearish sideways movement, with ETH remaining below $4,000 and BTC struggling to break the $70,000 price barrier. Currently, the market is facing bearish momentum, correcting from the previous bullish surge of the past two weeks.
In conclusion, the expiration of Bitcoin and Ether options contracts has had a historical impact on price volatility in the crypto market. Traders are closely monitoring the put/call ratios and open interest to gauge market sentiment. The recent approval of the ETH ETF has not resulted in the expected price increase, and the market is currently experiencing a bearish correction.