About 85,000 Bitcoin Options Contracts Set to Expire This Friday

About 85,000 bitcoin options contracts, worth around $2.3 billion, are set to expire on major cryptocurrency futures and options exchange Deribit this Friday.

According to Deribit data, around 700,000 Ethereum options, valued at over $1.2 billion, are also set to expire on May 26. 

“This Friday a total value of USD 3.6 billion will expire, which equals approximately 26% of Deribit’s open interest,” the platform said in a recent tweet. 

It detailed that the leading cryptocurrency, Bitcoin, has a Put Call Ratio of 0.38, indicating a higher number of positive bets.

Bitcoin’s maximum pain point, the point or the strike price where the largest number of options open interest will expire worthlessly, is situated at around $27,000. 

This level carries significant importance, as it could act as a critical support or resistance area that intensifies price fluctuations. 

The current value of Bitcoin contracts reaching expiry stands at an impressive $2.2 billion when converted to dollars. This staggering figure highlights the significance of the upcoming contract expiry and the potential impact it may have on the marketplace. 

Ethereum, the second-largest cryptocurrency, has a Put Call Ratio of 0.49, indicating a marginally higher proportion of bearish sentiment. 

Roughly 700,000 Ethereum options contracts have an expiry date of May 26, with a notional value of just over $1.2 billion. 

Traders are particularly monitoring the max pain price, which is estimated to be at $1,800 for Ethereum. This level could act as a focal point for market movements and potentially impact the short-term volatility of the cryptocurrency. 

As Bitcoin and Ethereum approach contract expiry, market participants could expect potential turbulence in the short term. 

The expiration of these contracts has the potential to create short-term price fluctuations that could reverberate throughout the entire cryptocurrency industry.

“In the meantime, Implied Vol remains at rock bottom level, with DVOL trading at 50 for BTC and ETH and shorter-dated even lower but climbing slightly,” Deribit said in the tweet. 

“BTC and ETH levels are the same, which is historically rare. We saw a similar rock bottom IV situation in Jan this year, followed by a big spike afterwards.”

26 May, Mega Monthly Expiry

This Friday a total value of USD 3.6 billion will expire, which equals approximately 26% of Deribit's open interest.

BTC USD 2.3 billion or ±85k contracts with a put call ratio of 0.38 which implies there are >2.5x more calls outstanding than puts.… pic.twitter.com/xnqzb0wkrM

— Deribit Insights (@DeribitInsights) May 23, 2023

Crypto Assets Struggle Amid US Debt Ceiling Debate Drama

Cryptocurrencies have been struggling to gather pace as investors remain worried about the debt ceiling and the Federal Reserve’s next move.

According to analysts, even if the US government raises the debt ceiling before the June 1 deadline, it could still negatively impact risk-on assets like stocks and cryptocurrencies because the issuance of new US Treasuries could reduce liquidity within the market. 

Fixed-income assets like one-year instruments, which currently offer a 5.15% yield, are usually attractive investment options in times of economic uncertainty. 

For instance, US money market fund assets hit a record $5.8 trillion this week as investors focused on short-term debt securities, according to a report by Reuters.