- Bitcoin’s $2.04 billion options expired with a max pain of $101K, trading now at $95,202.
- Ethereum faces sharper declines, losing 10.5% in a day, below its $3,750 max pain level.
As a seasoned researcher with years of experience navigating the volatile waters of the cryptocurrency market, I can confidently say that we are currently witnessing a fascinating interplay of factors shaping the trajectory of Bitcoin (BTC) and Ethereum (ETH). The recent expiry of major options contracts for these assets has undeniably sparked heightened activity, as expected.
Activity in the cryptocurrency market has increased significantly after the expiration of significant Bitcoin (BTC) and Ethereum (ETH) options agreements.
20th December saw the expiration of 21,000 Bitcoin options worth an estimated $2.04 billion in total, and 173,000 Ethereum options valued at around $590 million as well.
The Put-Call ratio for Bitcoin is 0.87, indicating a predominantly bullish outlook among traders, whereas the ratio for Ethereum stands at 0.5, signifying greater optimism from traders regarding this cryptocurrency.
The max pain point for Bitcoin was $101,000, while Ethereum’s was $3,750. With Bitcoin currently trading at $95,202.42 and Ethereum at $3,289.44, both assets remain below their max pain levels.
In my role as an analyst, I find that these expirations typically trigger short-term market fluctuations. As the markets settle down following the expiration, traders tend to readjust their positions accordingly.
Market declines continue for BTC and ETH
In the last day, Bitcoin decreased by approximately 6.41%, resulting in a weekly decline of 5.10%. This has lowered its total market value to around $1.88 trillion. On the other hand, Ethereum experienced a steeper drop over the same period, losing about 10.50% in 24 hours and 15.61% over the past week. Consequently, its market cap now stands at roughly $396.41 billion.
Bitcoin’s failed attempt to break $110,000 and the ongoing correction have pressured prices.
A recent AMBCrypto report indicates that the end of option contracts for both Bitcoin and Ethereum, totaling approximately $3 billion, triggered significant market action during the past month.
During that period, there were approximately $2.1 billion worth of Bitcoin options set to expire. The Put-Call Ratio was 0.83, indicating a slight preference for call options, while the maximum “pain point” was estimated at around $98,000.
These expirations contributed to the current trends observed in the market.
Increased ETF outflows and options activity
As Christmas and the end of the year approach, there’s been an increase in withdrawals from Exchange-Traded Funds (ETFs), which in turn is influencing market trends.
In simpler terms, market participants have been adjusting their trades to match the large number of expiring options, and a significant portion (over 30%) of the daily trading has involved buying call options (which give the right but not the obligation to buy an underlying asset at a specified price in the future).
Approximately 40% of cryptocurrency options are anticipated to expire by the end of the year, leading to a substantial decrease in estimated volatility. This has caught the attention of traders, who are keeping a close eye on these circumstances. A lower volatility environment might make options trading more cost-effective for them in the near future.
One user on X stated, “Perhaps the salvation lies in many options becoming valueless tomorrow.
The price of Bitcoin has become more steady around $95,000, following a dip below the $100,000 mark for the first time in two weeks. Analysts anticipate a possible rebound towards $100,000 as the market adapts to post-expiry conditions.
Currently, Ethereum is trading lower than its peak “critical level” of $3,750, sitting at $3,289.44. Despite the overall market downturn affecting all assets, historical trends hint at potential stabilization in upcoming sessions as traders adjust to the new price dynamics.
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2024-12-21 07:04