As $1.86 billion in Bitcoin (BTC) and Ethereum (ETH) options approach expiration, the crypto markets are grappling with heightened volatility, spurred by lower-than-expected US Consumer Price Index (CPI) data.
With the markets reacting sharply to this economic indicator, traders are preparing for potential price swings as the deadline approaches.
According to Deribit, nearly $1.4 billion in Bitcoin options are set to expire, with a maximum pain point of $59,500. The options include 24,383 contracts, down from last week’s 31,615. The put-to-call ratio is 0.83, reflecting a slightly bearish market sentiment.
For Ethereum, $471.79 million in options are expiring, involving 183,821 contracts — a decrease from last week’s 206,626 contracts. The maximum pain point is $2,650, with a put-to-call ratio of 0.80, suggesting a cautious market outlook.
The “maximum pain point” in crypto options is crucial, representing the price level where option holders face the most significant financial discomfort. Additionally, the “put-to-call ratio” indicates a higher prevalence of purchase options (calls) over sales options (puts). Lower ratios indicate optimism and higher ones signal bearishness.
Analysts from Greeks.live have commented on the market conditions leading up to today’s expiration. They noted that the US July Consumer Price Index (CPI) data was slightly lower than anticipated, hitting a new low since March 2021. This outcome has led to speculation that the Federal Reserve might cut rates in September, with expectations centered around a 25-basis-point reduction.
They further noted that after the ETF was passed, Ethereum’s price showed weakness, leading to a decline with only a modest rebound. Short-term implied volatility (IV) also decreased, with a skew favoring put options.
As of now, Bitcoin has dropped to $57,255, down from nearly $60,000 before the CPI data release. Similarly, Ethereum fell from $2,751 to $2,534. It is currently trading at $2,562.
Historically, the expiration of options contracts often leads to sharp yet temporary price movements, causing the crypto market to experience uncertainty and volatility as traders prepare for these fluctuations. However, the market typically stabilizes shortly after these expirations.
