$2B BITCOIN OPTIONS EXPIRY: IMPACT ON CRYPTO MARKETS?

This Friday marks a significant day for Bitcoin options, as a substantial batch is set to expire.

With Bitcoin reaching $64,000 earlier in the week, the question arises: will the imminent expiry influence Bitcoin’s value to climb further or lead to a market downturn?

Approximately 32,200 Bitcoin options contracts are due to expire on March 1, making it the second-largest expiry of the month. A more significant expiry, valued at over $6 billion, is anticipated at the month’s close.

Today’s Bitcoin options set to expire hold a notional value of nearly $1.96 billion, as reported by the crypto derivatives platform Deribit.

Significant Day for Bitcoin Options

The put-to-call ratio stands at 1.49, indicating a higher number of short contract (put) sellers compared to those holding long contracts (calls). This ratio suggests a market sentiment geared towards a potential correction, with the max pain point—a price level where the most significant losses occur upon expiry—set at $55,000.

The strike price of $60,000 is particularly critical, boasting 15,329 calls and a notional value of $934 million, exhibiting a put/call ratio of 0.20. This shows a strong bullish sentiment over those betting against it at this price level.

Interest is also high for the $65,000 strike price, with 14,137 calls valued at $861 million, as per Deribit’s data.

Bitcoin’s open interest (OI) by expiry. Source: Deribit

Deribit observed a record peak in open interest, which exceeded $29 billion on Feb. 29. Open interest represents the total outstanding derivative contracts, like options or futures, not yet settled.

Deribit highlighted, “Our 24-hour trading volume reached a new all-time high of $12.4 billion this morning.”

Greeks Live, a provider of crypto derivatives software, noted its clients traded options worth $620 million on Feb. 29, setting a new record for the platform.

Besides the significant number of Bitcoin options expiring, 235,000 Ethereum contracts will also expire, with a notional value of $793 million and a more balanced put/call ratio of 0.88, indicating a closer match between long and short sellers.

Outlook on Crypto Market

The crypto market has seen a slight downturn, with its total capitalization at $2.37 trillion currently.

Bitcoin has decreased to $60,878 at present, with further corrections anticipated. Ethereum has also seen a decrease to $3,372, mirroring Bitcoin’s movements as the market stabilizes following a week of gains.

The options expiry is not expected to significantly affect the spot markets, which seem poised for a correction.

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