Market Tensions Escalate: Will Bitcoin and Alternative Cryptocurrencies Continue to Plummet?
Preparing for a Massive $11.5 Billion Crypto Options Expiration
On May 30th, the crypto markets are bracing for a significant event: the expiration of a $11.5 billion options contract. This concurrently marks the end of the month, potentially intensifying market volatility, which has recently experienced a pullback.
Bitcoin's Options Expiration Details
Approximately 92,500 Bitcoin options contracts, worth around $10 billion, are due to expire today. The put/call ratio stands at 0.87, indicating a higher number of call positions, betting on a price rise, compared to put positions, betting on a price drop. The maximum potential loss is capped at $100,000, slightly below the current price. Notably, the most crowded price level is set at $120,000, with an open position of $1.7 billion. There's also an open position of $1.6 billion at the $110,000 level.
In a positive outlook, derivatives trading platform Greeks Live predicts Bitcoin may reach new highs, with the put/call ratio continuing to decline and prices surpassing $100,000 remaining probable throughout the year.
Ethereum's Options Expiration Details
A substantial options expiration event is also happening on the Ethereum front, with approximately 624,000 ETH options contracts, valued at $1.62 billion, due to expire. The maximum potential loss is calculated at $2,300, with a put/call ratio of 0.81.
Greeks Live analysis suggests that Ethereum's upward momentum has slowed, and the market is rebalancing in terms of both price and volatility.
Market Decline Ahead of Expiration
The markets have seen a sharp decline ahead of the expiration, with the total crypto market capitalization dropping by 4.4% in the last 24 hours, to $3.46 trillion. Bitcoin fell below $106,000 and Ethereum dipped below $2,600, while Solana, Dogecoin, Cardano, Hyperliquid, Chainlink, and Avalanche experienced more substantial losses among altcoins.
With the options expiration looming, market makers and investors may adjust their hedging strategies, potentially leading to increased volatility in the short term. However, recent data and volatility indicators suggest that the broader market does not anticipate dramatic moves in the immediate aftermath. Declining implied volatility (DVOL) indicates that most participants do not expect a violent spike in volatility from this event.
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The impending $11.5 billion crypto options expiration includes a significant amount of Bitcoin and Ethereum contracts, with technology playing a critical role in facilitating these investments through blockchain-based platforms. The volatility in the market, potentially aggravated by this event, could influence the direction of finance, particularly in the digital currency sector.
