The crypto market is gearing up for a potential rollercoaster as Bitcoin (BTC) and Ethereum (ETH) options worth a combined $10.7 billion are set to expire on Friday, November 29, 2024, at 08:00 UTC.
This event, hosted on the Deribit exchange, could spark significant price movements for the top two cryptocurrencies.
Breaking it down, Bitcoin accounts for $9.4 billion of the expiring options, while Ethereum makes up $1.3 billion. A closer look at the numbers reveals that 45% of Bitcoin options, valued at $4.2 billion, are in-the-money (ITM), with most being call options, contracts that profit when the price exceeds the strike price.
These call options are primed to deliver substantial gains, as Bitcoin’s current price hovers around $98,000, well above the strike price for many contracts.
Conversely, 55% of Bitcoin’s options, worth $5.2 billion, are out-of-the-money (OTM). Notably, $4.1 billion of these OTM options are puts, which typically hedge against price declines.
With Bitcoin’s bullish momentum, these hedges are unlikely to influence the market significantly.
Market analysts are keeping a close eye on the “max pain price,” where option sellers would incur the smallest losses. For Bitcoin, this level is $78,000, significantly below its current price.
Despite this, some experts argue that Bitcoin’s trajectory toward $100,000 could push market makers to buy more BTC to offset their risks, potentially driving prices higher.
Ethereum follows a similar pattern, with a large share of expiring contracts leaning toward call options. However, the impact on ETH may be less pronounced compared to Bitcoin’s dominance.
Historically, major options expiries have been linked to increased volatility.
For instance, Bitcoin saw a 3% dip last month when $4 billion in contracts expired. With this expiry involving over double that value, market participants are bracing for possible turbulence or an unexpected price rally.
