Another Friday has arrived, ushering in yet another Bitcoin and Ethereum options expiry event, coinciding with notable advancements in spot markets. Around 19,500 Bitcoin options contracts are set to expire on Friday, July 17, carrying a notional value of approximately $1.23 billion. This expiry is considerably smaller than typical events, thus it is improbable that it will influence spot markets. The cryptocurrency markets experienced an uptick later in the week, buoyed by inflation data from the United States that came in cooler than anticipated. However, these gains were subsequently relinquished by Friday.
This week’s batch of Bitcoin options contracts exhibits a put/call ratio of 0.87, indicating a near equilibrium between sellers of long (call) contracts and short (put) contracts. Max pain is approximately $62,500, which is below the current spot prices, indicating that some positions may expire out of the money. Open interest (OI), defined as the total value or quantity of Bitcoin options contracts that have not yet expired, is currently most substantial at the $70,000 strike price on Deribit, amounting to $1.6 billion. In contrast, short sellers maintain $1.1 billion in OI at the $60,000 level. Total BTC options open interest across all exchanges has increased slightly to $30 billion, according to source. “Puts continue to trade at a premium to calls across all major tenors, although the magnitude of that premium has become increasingly uniform,” stated source. This indicates that, on the whole, the market exhibits a reduced level of panic regarding an imminent crash compared to prior periods.
However, participants continue to allocate slightly more resources towards “drop protection” than towards “rise bets,” albeit to a lesser extent than in recent times. Meanwhile, Deribit stated, “This floods the market with liquidity and volatility, creating prime conditions for trading short-dated options on Deribit.” In conjunction with the modest volume of Bitcoin options set to expire today, approximately 131,000 Ethereum contracts are also reaching their expiration, representing a notional value of $242 million. The maximum pain point is identified at $1,750, accompanied by a put/call ratio of 1.5. Total ETH options open interest across all exchanges stands at a modest $4.8 billion. This brings the total notional value of crypto options expirations to approximately $1.4 billion, a relatively minor occurrence.
The cryptocurrency markets experienced a rebound, reaching a mid-week peak of $2.3 trillion; however, these gains began to diminish as the week drew to a close. Bitcoin has declined approximately 2% from its intraday peak of $64,800 to $63,300 during the Friday morning Asian trading session. It seems to be approaching the weekly resistance zone, which is approximately $62,000. Ether has experienced a decline of nearly 4%, falling from its six-week high to approximately $1,850 at the time of this writing.