- $4.7 billion worth of BTC and ETH options will expire, potentially impacting market volatility.
- The technical analysis on the chart shows us possible price movements for Bitcoin and Ethereum after the options expire
In today’s financial markets, all eyes are on the cryptocurrency sector, which is preparing for a major event.
Both Bitcoins [BTC] and ether [ETH] have seen significant swings lately, with Bitcoin up 1.4% and Ethereum up 0.7% over the past 24 hours with a current price of $68,223 and $3,733 respectively.
This activity is notable, especially as Ethereum has outperformed, rising 23.3% in the past two weeks, likely boosted by the US Securities and Exchange Commission’s recent approval of a spot ETF for this asset.
This has set the stage for today’s (May 31) main event: the expiration of a whopping $4.7 billion worth of BTC and ETH options contracts.
Decrypting Crypto Options
Options in the cryptocurrency market function similarly to those in the traditional financial world, where traders are given the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a certain price before the contract expires.
The Deribit platform facts revealed an expected increase in market volatility due to the current option expiration. This is supported by the significant volume of both Bitcoin and Ethereum options that will close soon.
A detailed look at the options market shows a higher number of call options, indicating bullish sentiment among traders. Specifically, the put/call ratio for Bitcoin is 0.61, indicating a dominance of bullish contracts.
The maximum pain point, where option holders suffer maximum financial loss, is around $66,000, which is significantly lower than current trading prices.
Source: Deribit
In particular, options with strike prices as high as $100,000 have significant open interest, with a total notional value of $886 million. This optimism is in stark contrast to the downside of substantial open interest of $519 million at a strike price of $60,000.
Notably, the current notional value for BTC call options is $2.9 billion.
Source: Deribit
For Ethereum, the scenario is somewhat different different. Approximately $1.8 billion in notional value of Ethereum call contracts will expire on that day, with a put/call ratio of 0.84.
This ratio suggests a more balanced view among traders on Ethereum’s near-term price prospects. Open interest in Ethereum futures is also peaking near an all-time high, driven by speculative trading following the ETF’s approval.
Source: Deribit
Technical analysis and market forecasting
To understand how Bitcoin (BTC) and Ethereum (ETH) might respond to significant options expiration, a technical analysis of their respective charts is essential.
Starting with Bitcoin, the daily swing structure places BTC in a premium zone, typically signaling potential selling to the discount zone before a reversal occurs.
A closer look at lower time frames shows that Bitcoin has recently encountered a critical supply zone on the 4-hour chart, indicating possible downward pressure.
Although there has been no substantial downside break after testing this zone, the 2-hour chart confirms another test of a supply zone, indicating a potential near-term decline to the $67,000 level, which may be the first structural downside marks a breakthrough in the stock market. 4-hour chart.
Source: TradingView
Similarly, Ethereum has tested a supply zone on the 4-hour chart, indicating a possible downtrend as it remains in the premium zone on the daily chart.
The asset’s 2-hour chart shows minor structural breaks to the downside, indicating a continued downtrend towards the $3,500 level.
Source: TradingView
In the backdrop of these technical moves, both cryptocurrencies have already inflicted losses on some traders.
According to Coinglass, Bitcoin traders have seen $19.92 million in liquidations, while Ethereum traders have seen approximately $19.63 million in liquidations.
Read Bitcoin (BTC) Price Prediction 2024-25
Furthermore, an AMBCrypto report notes that the Relative Strength Index (RSI) and Money Flow Index (MFI) for Bitcoin are 53.85 and 57.94 respectively.
These figures indicate a balanced market in which neither buyers nor sellers have dominant control, leading to ongoing price consolidation or range-bound movements.