Ethereum

Major

bullish

Bitcoin

Brian

The crypto market is up for a major overhaul as $3 billion Ethereum (<a href="https://yellow.com/asset/eth">ETH</a>) and Bitcoin (<a href="https://yellow.com/asset/btc">BTC</a>) options <a href="https://beincrypto.com/3-billion-bitcoin-ethereum-options-expiring/">expired</a> yesterday. 
Such crypto options expiry often makes way for price volatility which was visible in how the market fell yesterday. This is mainly because crypto investors and traders take a wait-and-see approach to closely monitor the situation. 
As many as 23,481 Bitcoin contracts which were worth $2.29 billion expired yesterday. The primary cause of concern is that this will result in losses for most BTC holders. Most traders will experience losses at the $97,000 level where the contracts expire. 
This was further explained by analysts at Greeks.live through a post on social media platforms X. According to them, the long side of the crypto market is strong and positive sentiments are ruling the bull market. 
“Bitcoin managed to hit $100,000 from zero in a decade which created a legend. Trump tweeted his congratulations, taking crypto from geek to mass. Near the end of the week, a sharp downward shot cleared a wave of leverage, other coins didn’t follow suit. The long side of the overall crypto market is very strong…market sentiment is very optimistic with solid long forces in the spot bull market,” said a tweet from Greeks.live 
However, the crypto market can't totally ignore the funding rates of leveraged contracts which will result in extended bullish bets. This ultimately will lead to a crypto market pullback. 
This is in line with recent reports that showed BTC options traders are hedging in anticipation of potential declines as there is growing interest in put options. 
<h2 id="puts-concentrate-on-december-end">Puts concentrate on December-end</h2> 
The put-to-call ratio of Bitcoin is currently running above 1 which means a bearish sentiment is coming. Compared to BTC, the put-to-call ratio of Ethereum is running below 1 at 6.3 which points to bullish sentiments. 
Digital-asset market data tracker firm Amberdata <a href="https://finance.yahoo.com/news/bitcoin-options-shows-traders-already-191103361.html">highlighted</a> how puts are striking at $95,000 and $100,000 levels for Bitcoin as the largest open interest positions are seen at these points in the last 24 hours. 
Additionally, there are increasing demands for puts at the $70,000 and $75,000 level. 
CoinsShares Research Associate, Luke Nolan elaborated on this when he said “we can see that put open interest is mostly concentrated in late December and late January, with some late February as well, which would be logical as to hedge this big upside move to any correction or surprises”. 
In contrast to Bitcoin, only 148,733 Ethereum contracts expired yesterday which had a net worth of $581 million. For ETH, the pain point is at $3,500 where most holders will experience losses as it is the point where options expire. 
When the market opened on Friday morning, Ethereum registered 0.73% growth as it traded at $3,902, while Bitcoin just topped the $104,000 level before experiencing a dip to $97,693. 
<h2 id="market-heading-for-maximum-pain-point-level">Market heading for maximum pain point level</h2> 
Several factors contributed to this rapid decline including an overleveraged market where traders are borrowing funds to bet on a BTC price rally. This resulted in major liquidations once the price declined. 
The Head Crypto Broker at FalconX, Brian Strugats said: “Bitcoin’s recent surge past the $100K mark has triggered a significant uptick in funding rates, approaching the intra-year high from March and nearing the all-time high set in Q4 2021.” “The pattern mirrors previous bull markets, where such spikes in funding rates accompany strong price momentum, reflecting the high demand for leveraged positions”. Strugats added. 
“Funding rates this high are typically temporary - we haven’t seen such a surge in the funding rate since early March of this year, where funding reached a high of 145% annualized on Deribit, amidst the ETF-flow driven move higher in BTC,” said Bohan Jiang, head of BTC options trading at Abra. 
Furthermore, the price correction was also triggered by the profit-taking after Bitcoin hit the $100,000 mark on Wednesday. The asset also witnessed massive sell orders around the $110,000 level which might have caused profit booking. 
Analysts have revealed that market makers are taking a cautious approach based on two weeks of options market data. This caused a spike in short-term price volatility which was fueled by BTC going below the $100,000 milestone along with the latest retracement 
“The market makers are avoiding exposure to expose exposure to the market. The probability of the market continues to be extremely bullish now,” said Greeks.live analysts in a post. 
Both BTC and ETH are nearing their maximum pain points as options contracts expired. However, the crypto market shouldn't be disheartened and remember this price impact is for the short-term. 
Ultimately the crypto market will bounce back and compensate for the deviations. 
As of December 7, Bitcoin is trading at $101,848, up 3.40% in the last 24 hours despite a 20.66% decline in its trading volume which is at $113.87 billion and the market cap rose to $2.02 trillion. On the other hand, Ethereum is up by 7.58% in the last 24 hours to trade at $4088 while its trading volume increased by 0.19% to touch $58.38 billion and the market cap went up to reach $492.47 billion.

Crypto Markets Brace for Major Bitcoin and Ethereum Options Expiry: Experts Weigh In

Table of Contents

Yellow News

Other articles published on Dec 6, 2024

Bitcoin’s Halving Cycle Predicts $140K to $4.5M Range: Key Figures to Watch This Cycle

ACX and ORCA Tokens Surge After Binance Listing Announcement

Crypto Exchange Volume Hits $2.9T in November, Highest Since May 2021

NFT market rebounds with 22% volume surge in November despite declining sales, data shows

Will XRP Break Resistance or Slide Further?

Spot Bitcoin ETFs surpass Satoshi’s estimated 1.1 million BTC holdings

Join our free newsletter for daily crypto updates!