The cryptocurrency market is bracing for the expiration of over $14 billion worth of Bitcoin options contracts, which is already impacting market volatility and investor sentiment.
Volume of Expiring Options
According to Deribit Metrics, a total of 141,271 Bitcoin options contracts are set to expire on Friday, June 28, accounting for more than 40% of Deribit's total open interest. Each contract equates to one BTC, bringing the total notional value of the expiring contracts to over $14 billion at current prices.
Market Sentiment
Leading up to the expiry, investors have increased their use of put options, pushing the Bitcoin put-call open interest ratio to 0.72, interpreted as a bearish signal. However, some analysts, including Lin Chen, head of business development for Asia at Deribit, suggest that much of the recent put activity seems to be driven by 'cash-secured puts', a common yield generation strategy where investors sell put options while keeping enough capital on reserve to buy BTC if prices fall.
Trading Trends and Projections
Out of the 141,271 expiring contracts, 81,994 are call options, yet most are expected to expire worthless. Nearly 20% of the call options are currently 'in the money', potentially causing short-term volatility. The 'max pain point' for this expiry is calculated at $102,000, with Bitcoin's price consolidating between $106,000 and $107,500, just above this threshold. Markets remain tense, with expectations of tight price action into expiry.
With the impending large expiry of Bitcoin options, investors are closely monitoring market dynamics, anticipating potential volatility shifts amidst current price consolidation.
