Impact of $4.2B Bitcoin Options Expiry on Crypto Markets Today

Approximately 62,600 Bitcoin options contracts are set to expire on Friday, October 25, with a notional value of approximately $4.26 billion.

The options expiry today coincides with the end of the month, making it significantly larger than typical weekly expiries. Additionally, spot markets have experienced a downturn since peaking on Monday—can this trend be reversed?

Bitcoin Options Expiry

This week’s considerable number of Bitcoin options has a put/call ratio of 0.66, indicating that there are far more long (call) contracts nearing expiration compared to short (put) contracts.

Furthermore, open interest (OI), which refers to the value or quantity of open options contracts awaiting expiration, remains robust at the $70,000 strike price, exceeding a billion dollars, according to Deribit.

A significant $1.2 billion in OI exists at the $80,000 strike price, indicating growing confidence among derivatives bulls that market momentum will persist.

Moreover, Bitcoin futures OI reached all-time highs earlier this week, surpassing $40 billion, as reported by Coinglass. However, some leverage was wiped out during this week’s market pullback.

Crypto derivatives provider Greeks Live noted that Bitcoin’s dominance in the options market has returned to 2021 levels, attributing this shift to Ethereum’s weakness and stating that options market indicators are now largely based on BTC data.

In its weekly crypto derivatives report, Deribit highlighted that the approach of the US presidential election continues to have a notable effect on market dynamics.

“Implied volatility for 14-day tenor options in both ETH and BTC is increasing, now nearing levels seen in longer-dated options.”

“Tenor options” enable contract buyers to select a maturity date tailored to their specific needs, which can help manage risk effectively.

Apart from today’s Bitcoin options, there are 403,000 Ethereum options about to expire with a put/call ratio of 0.97 and a notional value of $1 billion. This brings the total expiration value for Friday’s crypto options to approximately $5.3 billion for the week.

Crypto Market Outlook

The crypto markets are concluding a week of downturns with a modest recovery, as total capitalization hit $2.42 trillion during early trading in Asia on Friday morning.

Bitcoin has recouped nearly all of its losses, reaching an intraday peak of $68,821 late on Thursday before retreating below $68,000. The asset has gained 13% over the past two weeks.

In contrast, Ethereum remains sluggish, trading moderately lower for the day and hovering around the $2,500 mark.