On October 11, a significant number of Bitcoin options contracts, totaling approximately 18,800, are set to expire, representing a notional value around $1.1 billion. This expiry echoes the scenario witnessed in the preceding week, characterized by diminishing implied volatility and a contraction in the scale of these expiry events. The implication is that the upcoming expiry might not substantially sway the current spot markets, which are showing signs of retreat this week. The broader context is that this week’s options contracts display a put/call ratio of 0.91, suggesting that the market dynamics between long (call) and short (put) contracts are relatively balanced.
The concept of “max pain” emerges as a crucial factor in this landscape, pinpointing the level at which most losses could be incurred, currently calculated at $62,000—approximately $1,500 above existing spot prices. A glance at the open interest (OI) reveals that a formidable amount remains at the $70,000 strike price at $790 million, whereas OI for the $80,000 strike has dropped to $723 million. Notably, $964 million still looms at the $100,000 mark. This disparity in OI at various strike prices illustrates a cautionary stance among traders, revealing uncertainty regarding future price movements.
Adding complexity to the analysis, traders at Greeks Live have noted a noticeable weakening in the markets, particularly around the critical level of $60,000. The apprehension is palpable as the early weeks of the fourth quarter have presented disappointing outcomes, leading to a general ennui within the options market. This exhaustion has sent the current positions to a record low since 2023—a stark departure from the bullish sentiment that often pervades the crypto landscape. Nevertheless, Greeks Live suggests that current market sluggishness may foster new trading opportunities, advocating for the strategic accumulation of medium- to long-term calls at these lower levels.
In addition to Bitcoin’s options expiry, Ethereum is also witnessing significant activity, with about 212,000 options contracts poised to expire. The put/call ratio here stands at 0.4, with a max pain point set at $2,450 and a total notional value of $510 million. When considered alongside Bitcoin’s options expiry, the combined total for crypto options hitting the market amounts to a staggering $1.6 billion for the week.
The overall trend for both Bitcoin and Ethereum reflects a concerning retreat in spot markets, with total cryptocurrency capitalization slumping by 1.4% to $2.21 trillion during the writing of this article. Bitcoin witnessed a dip to $58,900 yet managed to recover to $60,500 in subsequent trading. However, this recovery pales in comparison to the asset’s more than 8% decline since the end of September, raising doubts about the anticipated bullish sentiment often associated with “Uptober.” Likewise, Ethereum mirrored this bearish trend, dropping to $2,335 before a slight recovery.
Compounding these challenges, fear, uncertainty, and doubt (FUD) are rampant, spurred by speculation surrounding the Chinese government’s potential liquidation of a large Ethereum hoard seized from the PlusToken Ponzi scheme. Such rumors can exacerbate market instability and contribute to investor anxiety.
As we navigate this complex milieu of Bitcoin and Ethereum options, the prevailing sentiment appears cautionary, balancing between potential opportunities and significant risk. The upcoming expiry events will likely shed light on how traders respond to these dynamic market conditions and whether optimism can be regained in the months ahead.