Bitcoin and Ether Options Worth $2.4B Set to Expire May 3, Max BTC Pain at $61K

The cryptocurrency market is bracing for a significant event on May 3, as Bitcoin and Ether options worth $2.4 billion are set to expire. According to data from the Deribit exchange, the put-to-call ratio for Bitcoin options contracts is currently at 0.50, with a maximum pain point of $61,000.

A Bitcoin options contract is a derivative contract that allows investors to speculate on Bitcoin price movements without owning Bitcoin itself. There are two types: call and put options. Call options give investors the right to buy a cryptocurrency at a specific price before a certain date. Put options, on the other hand, allow investors to sell a cryptocurrency at a particular price before the expiry date.

Investors often use the put/call ratio as a metric to assess the general state of the market. If traders are purchasing more puts than calls, it is considered a bearish sign, and if they are purchasing more calls than puts, then the market sentiment is considered bullish.

Bitcoin options contracts

On May 3, a total of 23,367 Bitcoin contracts worth $1.39 billion are set to expire. Similarly, a total of 334,248 Ether contracts with a notional value of $1 billion are expected to expire on Friday as well. These expiring contracts have a put-to-call ratio of 0.37 and a maximum pain point of $3,000.

The expiry of options contracts has historically been followed by short-term price volatility in the spot crypto market. Bitcoin and Ether have experienced bearish pressure in the past couple of weeks.

The BTC price fell below $60,000, marking an almost 20% weekly correction post-halving. The Ether price also fell below $2,900. The crypto market often bounces back from the options-led volatility within days of expiry.

Why Bitcoin, Ethereum, and Dogecoin Surged Today

The cryptocurrency sector is getting a nice boost today from yesterday’s commentary from Federal Reserve Chairman Jerome Powell. The market received a jolt from Powell’s commentary in a press release; he suggested the direction of the next Fed move will most likely be lower.

With a more accommodative monetary policy environment likely ahead, risk assets across the curve saw a big boost over the past 24 hours. Of course, the further out on the risk curve investors go, the more protracted this move can be. For top cryptos Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE), it’s meant a 24-hour move of 3.8%, 2.2%, and 4%, respectively, as of 4 p.m. ET Thursday.

Additionally, there are some token-specific factors at play with these three tokens that investors appear to be pricing in today. Let’s dive into what’s moving these closely watched digital assets.

The Rally Continues

Since hitting a new all-time high right around the time of its most recent halving, Bitcoin’s rally has faltered. Expectations for a potential continuation of this fall had taken hold because of economic factors that could affect the world’s largest cryptocurrency.

But with interest rate hikes seemingly off the table, analysts have grown increasingly bullish on Bitcoin over the near and medium term. Lower interest rates should bring the U.S. dollar down, inflating the price of various commodities and goods that act as stores of value. For those who buy into this thesis for Bitcoin, that’s a great thing. Indeed, yesterday’s press conference likely had the greatest impact on Bitcoin for this very reason.

Ethereum’s status as a commodity or store of value of sorts is also debatable. In second position in terms of market capitalization in this sector, Ethereum should benefit from a similar trend of capital flowing into cryptocurrencies that Bitcoin investors have benefited from. That’s because the market is still expecting the Securities and Exchange Commission to approve spot Ethereum ETFs at some point (though some suggest it’s possible the SEC could still deem this asset a security), which should improve the supply and demand dynamics around this token. As Ethereum has shifted to a proof-of-stake protocol and taken on some deflationary measures for its token, there’s a strong bull case building in the market that the same drivers that took Bitcoin on its run to record highs could be in play for Ethereum this year.

Dogecoin remains among the most speculative crypto assets out there, meaning it’s a top choice for traders and investors looking to play short-term price swings in the market. It’s no surprise that Dogecoin has seen a more pronounced move than its larger peers, for this reason alone. However, large liquidation data tied to a previous decline in these three tokens in recent days could also play a part in today’s rally. Investors appear to have been looking for any reason to load up on risk and put capital to work on this dip. This recent macro catalyst appears to have provided the needed push.

Is This Rally Poised to Continue?

Today’s move needs to be put into context. Bitcoin declined to a low of around $58,000 per token yesterday, and while it’s moving toward the $60,000 mark at the time of writing, that’s still well off its all-time high of around $73,000 hit earlier this year. So, there’s certainly both upside and downside potential in the near term, as this token did gap up quite quickly in short order.

Other cryptocurrencies like Ethereum and Dogecoin tend to follow Bitcoin’s lead, so I’d say this is the token most investors should be focused on right now. I’m of the view that if a number of bullish catalysts materialize in the coming days, it’s entirely possible Bitcoin could make another run at a new high, and Ethereum and Dogecoin could follow. It’s just a question of whether this specific macro catalyst can be amplified by some additional news. Right now, there’s not much on my radar, so I’m going to sit out this recent pop.

Bitcoin price