Markets
Will $4.3 Billion Bitcoin Options Expiration Send Crypto Markets into a Crash?
On Friday, July 26, approximately 61,200 Bitcoin options contracts will be traded with a notional value of approximately $4.26 billion.
The option expiration event is greater than usual deadlines because it’s the end of the month.
Furthermore, spot markets lost some momentum this week despite the launch of Ethereum ETF Spots in the United States for the first time.
Bitcoin Options Expiration
The current large batch of Bitcoin derivatives has a put/call ratio of 0.61, meaning that nearly twice as many long contracts are expiring as short contracts.
According to Deribit, open interest at higher strike prices appears to favor the bulls, with $942 million at a $70,000 strike price and a whopping $1.3 billion at a $100,000 strike price.
On the put side, there is approximately $500 million in OI at the $60,000 strike price.
BTC Options OI by expiry. Source: Deribit
In addition to the BTC contracts, there are approximately 500,000 Ethereum options contracts expiring on July 26. These have a notional value of $1.76 billion.
The put/call ratio on ETH contract expirations is 0.46, meaning there are more than twice as many long contracts expiring as shorts. The largest amount of open interest is at the $4,000 strike price with over $520 million, according to Deribit.
The two crypto options lots combined have a notional value of approximately $6 billion, making it one of the most important expiration events this year.
Additionally, Ethereum ETFs had their second day of outflows on July 25, with $152 million leaving the products in total. This was driven by another large Grayscale exodus of $346 million despite BlackRock and Fidelity getting more than $100 million in inflows between them.
Impact of the cryptocurrency market
Spot markets have rejected of around $120 billion this week, with Bitcoin returning to $64,000 on July 25.
Despite recovering from a low of $54,000 in early July, BTC failed to break above the $68,000 resistance earlier this week and fell. However, it recovered to $67,000 during the Asian trading session on Friday morning.
Ethereum has fared much worse despite the launch of spot ETFs. ETH fell by 11% since its launch, falling to $3,100 on July 25 before rallying to $3,250 during Asian trading on Friday.