A significant number of Bitcoin (BTC) and Ethereum (ETH) options are expiring today. Let's analyze the possible impact of this phenomenon on the price of underlying assets.

Cryptocurrency options are derivative contracts that allow traders to purchase or dispose of an asset at a predetermined price at a specific point in time. The owner of the option is not required to execute the transaction, which makes them more flexible compared to futures, where closing the position is mandatory.

The total value of the 25,414 BTC contracts and 252,603 ETH contracts expiring soon is estimated at $1.68 billion and $898 million, respectively. We will explore whether the expiration will provoke increased volatility in the market and whether this will have an impact on the prices of the two largest cryptocurrencies by capitalization.

The correction did not affect traders

According to Deribit, the BTC put to call ratio remains stable at 0.57. This means that traders are slightly more likely to sell calls than puts. Maximum pain point, i.e. the price at which the largest number of contract holders will suffer losses is $67 thousand.

Analysts note continued bullish sentiment among derivatives market participants, despite a significant correction in the price of Bitcoin after reaching a new all-time high.

The put/call ratio on Ethereum is 0.51, with the maximum pain point at $3,500.

How will expiration affect BTC and ETH prices?

BTC dipped slightly below $62,000 this week but has since partially recovered to sit at $66,350 at the time of writing. Ethereum showed similar dynamics, falling to $3,100.

It is quite difficult to predict market behavior on the expiration day of a large number of contracts, especially if any events are added that affect the news background. However, traders should monitor the situation closely to ensure that increased volatility does not trigger unwanted stop loss orders or erroneous trading decisions.

It should also be remembered that the impact of options expiration on the price of the underlying assets is short-term. Usually the next day the market returns to its normal state, and large price deviations are compensated.