Market Volatility Ahead of $2.1 Billion BTC and ETH Options Expiry

Today marks the expiration of $2.1 billion worth of Bitcoin (BTC) and Ethereum (ETH) options, coinciding with the release of the US core consumer price index (CPI) data. The convergence of these events raises questions about their potential impact on the prices of these digital assets and the overall volatility of the crypto market.

In particular, 18,183 Bitcoin options contracts, valued at approximately $1.18 million, are set to expire, mirroring a similar volume to that of last week’s expiration of 18,359 contracts. Data from Deribit indicates a put-to-call ratio of 0.62 for Bitcoin, suggesting a prevalence of purchase options (calls) over sales options (puts). Additionally, the data reveals that Bitcoin’s maximum pain point stands at $63,000, representing the price at which the asset would cause the most significant financial losses to holders.

Alongside Bitcoin options, 321,925 Ethereum contracts are also reaching their expiration today, totaling over $940 million in notional value. These contracts exhibit a put-to-call ratio of 0.27 and a pain point of $3,000.

Expiring Bitcoin Options. Source: Deribit

Greeks.live, a provider of tools for crypto options traders, offered insights on the expiration of today’s options contracts and assessed the impact of the recent US inflation data release on the crypto options market.

“The options market reacted significantly, with all major term implied volatilities (IVs) surging to new monthly highs. This was a sharp turnaround from earlier this year when the market was flat, causing major term options IV to drop to annual lows, making them particularly attractive for buyers. Every recent market-moving event has justified purchasing options,” noted Greeks.live.

Expiring Ethereum Options. Source: Deribit

The April CPI data indicated a slower growth rate for US inflation, which had a positive effect on the crypto market. Following the release, Bitcoin’s price surged from $62,000 to $66,000, and major altcoins like Ethereum and Solana (SOL) also saw substantial gains.

Related: Bitcoin Dips to $65,000 Amid Major Selling Pressure from FTX

While the expiration of options can lead to significant price volatility, these effects are generally short-lived. The market typically stabilizes the following day, neutralizing the initial price swings. Nevertheless, traders should thoroughly evaluate technical indicators and market sentiment before making investment decisions in this volatile environment.