How Will Crypto Markets Move When $4.2B Bitcoin Options Expire Today?

About 62,600 Bitcoin options contracts expire on Friday, October 25, with a theoretical value of about $4.26 billion.

Today’s options expiration is a month-end event, making it much bigger than the usual weekly expirations. Also, the spot markets have been in decline since their high on Monday, so can the trend be reversed?

Expiration of Bitcoin Options

This week’s big batch of Bitcoin options contracts has a put/call ratio of 0.66, meaning there are far more long contracts (calls) expiring than short contracts (puts).

Also, open interest (OI), or the value or number of open options contracts that have yet to expire, remains high at the $70,000 strike price, at more than $1 billion, according to Deribit .

There is also a hefty $1.2 billion in OI at the $80,000 strike price, suggesting derivatives bulls are confident the market’s momentum will continue.

Additionally, Bitcoin OI futures hit record highs earlier this week, surpassing $40 billion, according to Coinglass. However, some of that leverage was reduced in this week’s market pullback.

Crypto derivatives provider Greeks Live commented that BTC’s dominance in the options market has returned to 2021 levels. It added that this was “directly related to the weakness of ETH, and options market indicators they are now based almost exclusively on BTC data.”

BTC OI options by expiration. Source: Deribit

In its weekly crypto derivatives report, Deribit noted that the upcoming US presidential election is still heavily affecting market dynamics.

“Implied volatility for 14-day tenor options on both ETH and BTC is rising, now approaching levels seen in longer-dated options.”

“Tenor options” allow the buyer of the contract to choose the maturity date that best suits their needs and can be tailored to manage risk.

In addition to the current Bitcoin options, there are 403,000 Ethereum options that are about to expire with a put/call ratio of 0.97 and a notional value of $1 billion. That brings Friday’s crypto options expiration to about $5.3 billion for the week.

Crypto market outlook

Crypto markets are ending a week of declines with a slight recovery as total market capitalization reached $2.42 trillion in early trading in Asia on Friday morning.

Bitcoin has clawed back nearly all of its losses, hitting an intraday high of $68,821 late Thursday before retreating below $68,000. The asset remains at 13% during the last fifteen days.

The same cannot be said for Ethereum, which is still on the downside, trading slightly lower on the day and hovering around the $2,500 level.

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