Bitcoin and Ether dip before $22 billion options expiry day

Bitcoin and Ether have dropped today as investors prepare for the expected expiry of more than $22 billion in Bitcoin options on Friday, the 26th. The expiry event is expected to heighten market volatility tomorrow. 

The expiry comes amid broader macroeconomic uncertainty as investors await U.S. economic data, gross domestic product figures, weekly jobless claims, and Treasury auctions, which may sway market sentiment. 

Call options outnumber put options

Data from laevitas.ch shows that at least $22.6 billion in Bitcoin options will expire tomorrow. Deribit holds the majority of open interest, at $17.07 billion. OKX and CME have around $1.9 billion each in Bitcoin options due for expiry. For Ether, at least $5.12 billion in option contracts are set to mature on Friday. 

Call options outnumber puts, with $12.6 billion in call exposure showing the prevalence of neutral to bullish strategies as long as Bitcoin maintains support above $112,000. At least 81% of Deribit’s put contracts are set at $110,000 or lower, leaving approximately $1.4 billion active at the current levels. On the other hand, roughly $6.6 billion in call options contracts are set to mature at $120,000 and above, although only $3.3 billion has the possibility of maturity at current BTC price levels. 

Monitoring the open interest for Deribit at the current price ranges highlighted several settlement ranges. If BTC closes between $107,000 and $110,000, put options will dominate with $2 billion against $1 billion in calls. This will result in a net $1 billion advantage for bearish bets. If BTC closes between $110,000 and $112,000, then calls and puts would be matched at $1.4 billion each. Alternatively, if BTC closes between $112,100 and $115,000, the bulls would be favored with a $600 million advantage for calls. 

The 30-day options delta skew for Deribit shows 13%, meaning puts are trading at a premium compared to calls. This poses a cautionary note for investors despite a bullish-favoring setup. 

Crypto markets brace for volatility

Ether has declined this week due to cooling institutional demand and short-term technical pressures. Rachael Lucas, a cryptocurrency analyst at BTC Markets, revealed that technical analysis shows a near-term weakness and warned that more liquidations may follow if the price breaks below $3,800.

Tony Sycamore, an analyst at IG Australia, also commented that if ETH closes below $4,000, the token may drop to test the $3,700 and $3,500 levels. Fund outflows from Ether ETFs have added to the pressure, with nearly $300 million pulled from the Ether ETFs this week. On Monday, at least $1.7 billion bullish positions were wiped out of the market following the downturn. 

Bitcoin dropped by 1.3% at the time of publication and is currently trading at $111,578.31. The token has recorded $53.48 billion in 24-hour volume and a market cap of $2.22 trillion. Ethereum, on the other hand, has dropped below 4.11% and is currently trading at $4,004.11. ETH has also recorded $46.55 billion in 24-hour volume and a market cap of $483.52B. The wider crypto market cap has dropped from a high of $3.92 trillion this week to $3.82 trillion today, shedding off over $100 billion in value.

If Bitcoin maintains its price above $112,000, then Bitcoin call option holders may benefit; however, lower price levels may benefit bearish strategies. Investors expect market volatility to intensify throughout Friday and into the weekend.

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