Traders Brace for Impact as Almost $4 Billion in Bitcoin and Ethereum Options Expire

The crypto market will witness $3.98 billion in Bitcoin (BTC) and Ethereum (ETH) options contracts expire today. This massive expiration could impact short-term price action, especially as both assets have recently declined.

With Bitcoin options valued at $3.4 billion and Ethereum at $581.57 million, traders are bracing for potential volatility.

High-Stakes Crypto Options Expirations: What Traders Should Watch Today

According to Deribit data, Bitcoin options expiration involves 38,566 contracts, compared to 48,794 contracts last week. Similarly, Ethereums expiring options total 189,018 contracts, down from 294,380 contracts the previous week.

Expiring Bitcoin Options. Source: Deribit

For Bitcoin, the expiring options have a maximum pain price of $79,500 and a put-to-call ratio of 0.85. This indicates a generally bullish sentiment despite the assets recent pullback. In comparison, their Ethereum counterparts have a maximum pain price of $3,000 and a put-to-call ratio of 0.92, reflecting a similar market outlook.

Expiring Ethereum Options. Source: Deribit

The maximum pain point is a crucial metric that often guides market behavior. It represents the price level at which most options expire worthless, inflicting maximum financial “pain” on traders.

Meanwhile, the put-to-call ratios below 1 for both Bitcoin and Ethereum suggest optimism in the market, with more traders betting on price increases. While the put options represent bets on price declines, call options point to bets on price increases. Taken together, this metric (put-to-call ratio) gauges market sentiment.

Traders and investors should brace for volatility, as options expirations often cause short-term price fluctuations, which create market uncertainty.

“The market could be very volatile, so trade with caution,” top Asian crypto influencer Wise Advice warned.

However, markets usually stabilize soon after as traders adapt to the new price environment. With todays high-volume expiration, traders and investors can expect a similar outcome, potentially influencing future crypto market trends. As Bitcoin and Ethereum options near expiration, both assets could approach their respective strike prices.

This is a result of the Max Pain theory, which predicts that options prices will converge around the strike prices where the largest number of contracts — both calls and puts — expire worthless.

More Headwinds With Year-End Crypto Options Expiry

With markets still optimistic, the general sentiment is that Bitcoins upside potential remains viable, potentially reaching $100,000 before year-end. Nevertheless, bigger problems lie ahead, with many crypto options due for expiry at the end of the month and, potentially, even more (around $11.8 billion for BTC) on December 27.

These dates are significant given Bitcoin bull runs tend to end precisely at the end of the year, between November and December. However, considering they only started between October and November, they have often extended into the early months of the new year.

The expiration of these Bitcoin options at the end of the year may present as a major catalyst. It could influence immediate price action as well as the trajectory into the new year, 2025. With bulls looking at the years end expiration as a unique opportunity to foray into unchartered territory beyond $100,000, bears commit to limiting the price discovery to defend their positions.

“Looking at the options market, the market is clearly polarized and trading is very fragmented, with some of the larger traders heading for the sky to go long, while more traders are currently on the short side of the market,” Greeks.live shared.

Should the positioning battle intensify towards the end of the year, the fallout from these options expiring could ripple beyond December, setting new standards for Bitcoin and Ethereum.

The latest data shows that Bitcoins trading value has dropped by 2.46% to $87,813. Similarly, Ethereum has fallen by 5.43%, now trading at $3,053.