Will Crypto Markets Continue To Grow Today When $1.2B Bitcoin Options Expires?

About 20,000 Bitcoin options contracts expire on Friday, September 20. These crypto derivatives have a theoretical value of around $1.26 billion.

Today’s options expiration is very similar in size to last week’s expiration event, which did not have much of an impact on the crypto spot markets.

Next week’s expiration is an end-of-month and end-of-quarter event with over $5.3 billion in Bitcoin contracts expiring.

Expiration of Bitcoin Options

This week’s batch of Bitcoin options contracts has a put/call ratio of 0.85, meaning there are slightly more long contracts (calls) expiring than short contracts (puts), but they are quite equal

Open interest, or the value or number of open option contracts yet to expire, is still high at the $70,000 and $75,000 strike prices, with more than $700 million at both levels.

Additionally, there is an additional $848 million in OI at $90,000 and over $1 billion in OI at the $100,000 strike price, according to Deribit.

Bitcoin OI by Expiry. Source: Deribit

Crypto derivatives provider Greeks Live commented on the long-awaited Federal Reserve rate cut and market reaction this week, saying it pushed crypto markets higher while US stocks “had a lower performance”. Regarding crypto options, he added:

“Implied volatility declined significantly across all major maturities, with ultra-short IVs falling more than 25% as large investors’ short-selling expectations fell short.”

Implied volatility is a measure of expected future fluctuations arising from expiring derivative contracts. The Greeks added that there will be two more Fed interest rate meetings on Nov. 8 and Dec. 19, “and the market expects a cumulative rate cut of 100 bp.”

In addition to this week’s Bitcoin options, there are about 124,000 Ethereum options expiring with a notional value of $303 million and a put/call ratio of 0.66.

The Bitcoin Fear and Greed Index has returned to neutral with a reading of 54 and market sentiment has improved slightly over the past week.

Bitcoin’s Fear and Greed Index is 54, neutral
Current price: $62,941 pic.twitter.com/vxv68pdG9v

— Bitcoin Fear and Greed Index (@BitcoinFear) September 20, 2024

Crypto market outlook

Crypto markets are ending the week up $120 billion, or about 5.7%, in total market capitalization, which was $2.27 trillion at the time of writing .

Bitcoin hit its highest price in nearly a month on Thursday, briefly topping $64,000 before retreating during Friday morning’s Asian trading session. The asset was changing hands for $63,900 at the time of writing after a daily gain of 2.5%.

Ethereum hit an intraday high of $2,550 before returning to the $2,530 level, having posted a 5.5% gain on the day.

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