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Nearly $6.5b in Bitcoin and Ethereum options are set to expire

35 Listen to this article The impending expiration of a large volume of Bitcoin (BTC) and Ethereum (ETH) options contracts […]

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The impending expiration of a large volume of Bitcoin (BTC) and Ethereum (ETH) options contracts is a significant event in the cryptocurrency market. Here’s an overview based on recent reports:

Overview

On Friday, at 08:00 UTC, a substantial number of Bitcoin and Ethereum options contracts will expire on the Deribit exchange. This expiration includes:

  • Bitcoin Options: Approximately 150,633 contracts worth $4.57 billion.
  • Ethereum Options: Around 1.23 million contracts valued at $2.3 billion.
  • Total Value: The combined notional value of these expiring contracts is around $6.8 billion.

Market Dynamics and Expectations

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Impact on the Crypto Market

  • Influence on Prices: Options expiries are closely watched as they can influence market prices, both before and after the settlement.
  • Hedging Activities: Market makers, tasked with creating liquidity, engage in hedging activities to manage their gamma exposure, impacting market dynamics.
  • Potential Price Movements: For Bitcoin, due to the large concentration of open interest and the negative gamma positioning of dealers, the market might experience significant price movements around the $30,000 level.

FAQ’s

What are Bitcoin and Ethereum options?

Options are financial derivatives that give the holder the right to buy or sell the underlying asset at a predetermined price on or before a specific date.

Why are these expiries significant?

They represent a large volume of trade and can significantly influence market liquidity and price volatility.

What is ‘max pain’ in options trading?

It’s the price level at which the most options will expire worthless, causing maximum loss to the largest number of option holders.

How do market makers influence the market during these expiries?

They engage in buying or selling the underlying asset to manage their exposure, impacting the market price dynamics.

What might happen to the prices of Bitcoin and Ethereum after these expiries?

For Bitcoin, significant volatility around the $30,000 level is possible, while Ethereum is expected to remain relatively stable due to long gamma positions held by market makers.

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