Crypto Market Bracing for Volatility as $10B in Bitcoin and Ether Options Set to Expire

The cryptocurrency market is bracing for a potentially volatile week as a massive $10 billion in Bitcoin and Ether options are set to expire on Deribit, the leading crypto derivatives exchange. This impending expiry represents over 40% of the current cumulative open interest, which stands at more than $23 billion.

Market volatility expected

Such large quarterly expiries often lead to heightened market volatility, as increased trading volumes and the unwinding or rolling over of positions make prices more unpredictable. As Luuk Strijers, chief executive officer at Deribit, notes, “Over 25% of Deribit open interest is set to expire in-the-money, equating to over $2.7 billion. The total notional size of the expiry is over $10 billion.”

“As we approach Friday’s large quarterly expiry, potentially influenced by ‘quadruple witching’ and related volatility in U.S. stock markets, over 25% of Deribit open interest is set to expire in-the-money, equating to over $2.7 billion. The total notional size of the expiry is over $10 billion.” - Luuk Strijers, CEO at Deribit

Having more than 25% of open interest set to expire in the money suggests that a significant number of derivative contracts are expected to be profitable for their holders at expiration. Bitcoin, the leading cryptocurrency by market value, has dropped nearly 9% this month, testing levels below $60,000, which attracted bargain hunters. As usual, this sell-off has impacted the broader market, pulling ether down by almost 10%.

Bitcoin price testing levels below $60,000

Despite the current bearish sentiment, data from Amberdata indicates that investors are willing to pay a higher premium for near-term and long-term calls, which offer asymmetric upside, compared to puts. This suggests that traders are anticipating a positive shift in the market.

Investors anticipating a positive shift in the market

BTC is currently trading at $60,958, down 2.24% over the past 24 hours, while ETH is down 1.14% and hovering around $3,375.

Ethereum price hovering around $3,375

The impending expiry of these massive options contracts is likely to have a significant impact on the cryptocurrency market, and traders are bracing for a potentially volatile week ahead.