With the asset hitting an all-time high of over $69,000 this week, will today's big expiration event push Bitcoin prices higher or begin a correction?
About 29,000 Bitcoin options contracts will expire on March 8 with a notional value of about $2 billion.
This week's expiration event is a little smaller than last week, but a huge event worth over $6 billion will happen at the end of March.
Bitcoin options expiration looms
The put/call ratio for expiry of Bitcoin options today is 0.86, meaning that sellers of long and short contracts are relatively evenly matched.
The maximum pain point, or the price at which most losses will occur at expiration, is $60,000. Deribit data also reveals that there is a lot of open interest at $65,000 and $70,000 with $1.9 billion of combined notional value.
Cryptocurrency derivatives instrument provider Grex Live reported that market volatility reached its highest level in almost a year this week. She added that all key term implied volatilities (IV) are trending significantly higher, “with very short-term implied volatilities at one point reaching 100%.”
Implied volatility is a measure used to forecast market expectations about future price movements of the underlying asset of an option.
“The volume of options and positions has been on the rise, and the advantages of options have been very clear recently, with protected options for spot buyers and high leverage for long and short buyers, all of which are trading instruments with very high profit/loss ratios.”
In addition to Bitcoin contracts, about 270,000 Ethereum options with a put/call ratio of 0.55 are scheduled to expire.
It has a face value of $1.05 billion and a maximum pain point of $2,950. Derrbit data suggests there is a lot of open interest at strike prices of $3,000 and $4,000, with the latter being the largest at $826 million.
Crypto market forecast
The cryptocurrency market capitalization rose 2.2% on the day to reach $2.67 trillion. Bitcoin was approaching $67,000 at the time of writing, after a daily increase of 1.8%.
Ethereum fared better today with a 3.6% increase to surpass $3,900 for the first time in over two years.
However, the two biggest intraday movers were Binance Coin (BNB), which added 10% to $468, and Shiba Inu (SHIB), which rose 11% as it neared the top 10 in terms of market cap.
