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Bitcoin, Ethereum options expiry triggers $2.63B shakeup amid market pullback
The cryptocurrency market is experiencing significant volatility as a result of the expiration of major Bitcoin [BTC] and Ethereum [ETH] options contracts worth a staggering $2.63 billion.
In recent hours, both assets have witnessed substantial declines in value, with Bitcoin plummeting 6.41% over the past 24 hours and 5.10% over the past week to reach a market capitalization of $1.88 trillion. Meanwhile, Ethereum has suffered an even more severe downturn, losing 10.50% over the day and 15.61% in a week, leaving it with a market cap of $396.41 billion.
The expiration of these options contracts is believed to be contributing to this market pullback. The $2.04 billion worth of expired Bitcoin options saw a max pain point at $101K, while Ethereum’s $590 million contract value had a max pain level of $3,750. Notably, both assets are currently trading below their respective maximum pain levels.
The impact of these expiries is expected to be felt across the broader cryptocurrency market, with many anticipating a short-term correction before the market stabilizes. Despite the ongoing decline, analysts remain cautiously optimistic about potential long-term prospects for crypto.
As the year-end approaches and Christmas holiday season commences, it’s not uncommon to see increased ETF outflows, which may also be playing a role in exacerbating these market movements. Additionally, market makers have adjusted their positions to align with the massive volume of expiring options, contributing to heightened activity within the space.
In an interesting note, block call options now account for over 30% of daily trading volumes. The impending expiration of nearly 40% of all crypto options by year-end is expected to significantly reduce implied volatility in the short term.
As a result, traders are closely monitoring these market dynamics, anticipating potential stabilization and recovery as prices adjust to post-expiry conditions.
Source: ambcrypto.com
