A total of $1.5 billion worth of Bitcoin ($BTC) options are set to expire today, April 12, 2024, while an additional $800 million worth of Ethereum ($ETH) options contracts are to expire as well, injecting uncertainty into the cryptocurrency market.
With a combined notional value of $2.3 billion, the expiry of these contracts, representing 21,000 BTC and 230,000 ETH, could trigger increased volatility in the coming days. According to analysts from Greeks.live, the put-to-call ratio for Bitcoin options contracts sits at 0.62, suggesting a bias towards put options, which give holders the right but not the obligation to sell BTC at a predetermined price.
The analysts noted that the “maximum pain point” for Bitcoin, the price at which most options contracts would expire worthless, is at $69,000. Ethereum options, they wrote, have a put-to-call ratio of 0.49, with a “maximum pain point” at $3,425.
Bitcoin, it’s worth noting, is at the time of writing trading at $70,700 after moving up around 0.4% over the past 24 hours, while Ethereum is changing hands for around $3,515 per token after losing 1.3% of its value over the last 24-hour period, according to CryptoCompare data.
The analysts added they detected a notable rise in volatility within the crypto market this week, with Bitcoin oscillating between $66,000 and $72,000 and Ethereum hovering around $3,500. Short calls, a bearish strategy that profits from a decline in price, have emerged as the most popular trade this month.
Furthermore, expectations surrounding the upcoming Bitcoin halving event, which will cut in half the coinbase reward miners receive per found block, effectively halving the supply of newly minted BTC entering the market, appear “to be overdrawn,” they wrote.
The analysts concluded that with a recent slowdown in inflwos to spot Bitcoin exchange-traded funds (ETFs), a lack of “new hot spots in the market and a more subdued sentiment,” that “selling medium-term is indeed the best option, and short term is worth it due to the presence of the halving.”
As CryptoGlobe reported, a popular cryptocurrency analyst known in the space for accurately predicting the cryptocurrency market bottom during the 2018 bear market, has recently outlined Bitcoin’s “max pain” scenario, but noted that despite it there could still be a “real run up.”
The analyst noted that he believes Bitcoin’s “max pain” scenario is to lose its recent high and while doing so see investors buy the dip expecting it to keep on rising as they “think its some kind of triangle breakout.”
Per his words, the scenario would then see BTC’s price “fade back into the lower end of the range again” before the cryptocurrency starts surging again. His price targets suggest BTC could fall to around the $64,000 mark before a surge takes it to around $82,000.
Featured image via Pixabay.
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