The cryptocurrency market is poised for increased volatility due to the expiration of approximately $4.6 billion in Bitcoin and Ethereum options. This expiration follows key US macroeconomic events—the elections and the Federal Open Market Committee (FOMC) meeting—that shaped sentiment towards Bitcoin this week.
Data from Deribit indicates the expiration of 48,794 Bitcoin options contracts worth $3.7 billion. These options carry a put-to-call ratio of 0.72 with a maximum pain point of $69,000. Similarly, Ethereum options nearing expiration involve 294,380 contracts worth $854.88 million, featuring a put-to-call ratio of 0.65 and a maximum pain point of $2,500.
The maximum pain point is a crucial metric in options trading, signaling the price at which the highest number of options would become worthless, leading to maximum financial "pain." The put-to-call ratio reflects market sentiment, comparing the volume of put options to call options.
Recent market activity highlighted by Deribit saw trading volumes rise to an all-time high of $10.8 billion on November 6, fueled by expectations of a Donald Trump victory. Analysts from Greeks.live observe that market sentiment, despite Bitcoin and Ether's gains, is cooling as the hype around the elections fades, leading to profit-taking in the options market.
Additionally, Greeks.live notes a reduction in Bitcoin "doomsday options," indicating a broader calming in market financing mechanisms. Implied volatility (IV) has decreased across major terms, with Ethereum maintaining gains better than Bitcoin.
Large investors are reportedly strategizing for the end-of-year market and the potential dynamics in spring. The FOMC's decision to lower interest rates by 0.25% noted during this period also factors into the broader economic landscape, as Federal Reserve chair Jerome Powell maintains a stance against further interest rate hikes.
Powell also addressed speculations tied to Trump's anticipated changes to US crypto regulations, ensuring his commitment despite potential political pressure.
