Key Insights
- Bitcoin options with a notional value of $880 million are set to expire today.
- Traders maintain a bullish outlook on Bitcoin.
- Traders should remain vigilant to potential increased volatility and avoid making hasty trading decisions.
As a significant number of Bitcoin (BTC) options are set to expire today, the market awaits to see how this event might influence the price of the leading cryptocurrency.
Bitcoin options are derivative contracts that allow traders to buy or sell BTC at a specific price on a specific expiration date, offering flexibility compared to futures contracts.
With approximately 29,000 contracts worth $880 million expiring soon, the question arises whether this event will trigger increased volatility and have an impact on the price of Bitcoin.
Traders Optimistic as BTC Put/Call Ratio Holds Steady
According to Greeks.live, the BTC put/call ratio is holding at 0.76. This means that market participants are still bullish and expect further growth in the price of the asset.
The maximum pain point is at $25,000. This is the price at which the asset will bring financial loss to the largest number of holders.
Greeks.live analysts also noted that the situation on the crypto market could change radically in the near future.
Volatility has continued to pick up this week and despite several positive stimulus such as Hong Kong’s announcement of its own stablecoin, the current rally has clearly been unsustainable. In the long term, declining volatility now seems like an inevitable trend,” they commented.
The Potential Effects of Options Expiry on Bitcoin Price
Yesterday, the price of bitcoin soared to a new annual high and broke the $31,500 mark. However, attempts to gain a foothold above this level were unsuccessful: over the past 24 hours, the main cryptocurrency sank by 1.22% and is trading at $30,219 at the time of writing.
It is quite difficult to predict how the market will behave on the expiration day of a large number of contracts. Especially if any events that affect the news background are added to it. However, traders should keep a close eye on the situation so that increased volatility does not lead to undesirable stop-loss orders or incorrect trading decisions.
Read also: Bitcoin (BTC) Outperforms the Nasdaq and S&P 500 Indices
Do not forget that the impact of options expiry on the price of the underlying asset is short-term. As a rule, the next day the market will return to its usual state, and strong price deviations will be compensated.
Will the expiration of Bitcoin options lead to increased volatility in the market and affect the price of Bitcoin? Let us know in the comments.