Will $4.3B Expiring Bitcoin Options Tank Crypto Markets?

On Friday, July 26, there will be about 61,200 Bitcoin options contracts with a theoretical value of about $4.26 billion.

The option expiration event is larger than regular expirations because it is the end of the month.

Additionally, spot markets have lost some momentum this week despite the launch of spot Ethereum ETFs for the first time in the US.

Expiration of Bitcoin Options

Today’s big batch of Bitcoin derivatives has a put/call ratio of 0.61, which means almost twice as many long contracts expiring short.

Open interest at higher strike prices appears to favor the bulls with $942 million at $70,000 and about $1.3 billion at a strike price of $100,000, according to Deribit.

On the sale side, there is about $500 million in OI at the $60,000 strike price.

BTC OI options by expiration. Source: Deribit

In addition to the BTC contracts, there are about 500,000 Ethereum options contracts expiring on July 26. These have a theoretical value of $1.76 billion.

The put/call ratio of the expiring ETH contract is 0.46, meaning there are more than twice as many long contracts expiring than short contracts. The largest amount of open interest is at the $4,000 strike price with more than $520 million, according to Deribit.

The two lots of crypto options combined have a theoretical value of about $6 billion, making it one of the biggest expiration events this year.

Additionally, Ethereum ETFs had their second day of outflows on July 25, with $152 million leaving the products overall. This has been caused by another large grayscale exodus of $346 million, although BlackRock and Fidelity received more than $100 million between them.

Impact of the crypto market

Spot markets have declined around $120 billion this week, and Bitcoin returned to $64,000 on July 25.

Despite recovering from a low of $54,000 in early July, BTC failed to break above the $68,000 resistance earlier this week and pulled back. However, it recovered $67,000 during the Asian trading session on Friday morning.

Ethereum has fared much worse despite the launch of spot ETFs. ETH fell 11% since the day of launch, falling to $3,100 on July 25 before recovering to $3,250 during Asian trading on Friday.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!