How will the markets react to the $2 million Bitcoin options expiring today?

Approximately 20,000 Bitcoin options contracts will expire on Friday, January 3, in the first such event of 2025.

They have a notional value of $1.93 billion, which is a fraction of last week’s big year-end expiration event, so the impact on spot markets is likely to be minimal.

Expiration of Bitcoin Options

This week’s batch of Bitcoin options contracts has a put/call ratio of 0.68, meaning there are more long (call) contracts expiring than short (put) sellers.

Open interest, or the value or number of options contracts that have not yet expired, is highest at the $120,000 strike price, with $1.4 billion in OI, according to Deribit. There is also $1.3 billion in OI at $110,000, so derivatives traders remain bullish on open contracts at higher strike prices.

Bitcoin OI Options by Expiration. Source: Deribit

On January 2nd, Deribit reported that the market for continuous trading, or perpetual swaps, is showing more optimistic signs, similar to what was seen before the recent recession.

“Options markets report a similar mixed message: BTC’s short-term volatility smiles remain slightly more biased towards OTM puts, while longer tenors have increased their bullish tilt.”

He added that the year-end expiration in December of a significant proportion of the market’s OI in options “did not produce the fireworks that some expected”.

Earlier this week, crypto derivatives provider Greeks Live noted that it had taken a significant short position in Bitcoin with a theoretical value of $42 million. The speculator is betting that BTC will not go above $150,000 on March 28 and will net $900,000 from the bet if successful.

In addition to current Bitcoin options, around 205,000 Ethereum contracts expire today. These have a notional value of $710 million and a put/call ratio of 0.82.

That brings the notional expiration value of Friday’s combined crypto options to about $2.6 billion.

Crypto market outlook

About $160 billion has flowed into crypto markets since the start of the year on Wednesday, bringing total market capitalization to $3.56 trillion.

Bitcoin has had a solid 24 hours, gaining 1.7% to settle near the $97,000 level during early trading in Asia on Friday. However, it remains range-bound and needs to clear the resistance at the psychological $100,000 level to see further momentum.

Meanwhile, Ethereum, which has been predicted to perform well this quarter, fared better, gaining 2% on the day as it approaches the $3,500 price level. ETH needs to clear $3,600 to break the resistance for further gains.

Altcoins were almost all in the green this Friday, with most of them outpacing Bitcoin in daily gains.

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