Market Volatility Increases as Bitcoin and Ethereum Options Expiration Date Nears
As the expiration date for $1.86 billion worth of Bitcoin (BTC) and Ethereum (ETH) options approaches, the cryptocurrency market has seen a rise in volatility. This increase in volatility can be attributed to lower-than-expected U.S. Consumer Price Index (CPI) data, which has caused a strong reaction in the market.
Impact of Options Expiration on Bitcoin and Ethereum Markets
Deribit has reported that approximately $1.4 billion worth of Bitcoin options are set to expire soon, with a significant pain point at $59,500. The number of contracts for Bitcoin options has decreased from the previous week, with a put to call ratio of 0.83 indicating a slightly bearish market sentiment. On the other hand, Ethereum options worth $471.79 million are expiring, with a major pain point at $2,650 and a put ratio of 0.80, signaling a cautious outlook.
Analysts’ Perspectives on Market Conditions Post-Expiration
Analysts at Greeks.live have commented on the market conditions leading up to the expiration date. They noted that the U.S. CPI data for July came in lower than expected, raising speculation about a potential interest rate cut by the Federal Reserve in September. Additionally, the price of Ethereum has weakened after the adoption of the ETF, leading to a distortion in favor of puts due to falling short-term implied volatility.
According to analysts at Greeks.live, the decline in implied volatility is a rare occurrence in the options market, allowing institutional sellers to profit from the bear market. As Bitcoin and Ethereum prices have dipped following the CPI data release, the market is currently experiencing some instability.
However, historical trends suggest that the market typically stabilizes shortly after the expiration of options contracts, despite the initial volatility and uncertainty leading up to the expiration date.
Photo sources: Deribit
