Will Markets React to $2.8B Crypto Options Expiry Event?

Friday has arrived again, and that means another round of Bitcoin and Ether options contracts are expiring while spot markets have steadily climbed this week.

Around 25,000 Bitcoin options contracts will expire on Friday, Jan. 16, with a notional value of roughly $2.4 billion. This expiry event is slightly larger than last week’s, but derivatives trading remains slow, so there is unlikely to be any impact on spot markets.

Crypto markets have gained around $130 billion since the start of the week, with the majors hitting two-month highs despite the delay of the Senate markup for the market structure legislation in the United States.

Bitcoin Options Expiry

This week’s tranche of Bitcoin options contracts has a put/call ratio of 1.2, meaning that expiring calls (longs) are slightly lower in number than puts (shorts). Max pain is around $92,000, according to Coinglass, which is pretty close to the current spot prices, so many will be in the money on expiry.

Open interest (OI), or the value or number of Bitcoin options contracts yet to expire, remains highest at $100,000, which has $2.2 billion at this strike price on Deribit. There remains around $1.2 billion in OI at $75,000 as bears continue to short the asset.

Total BTC options OI across all exchanges is still climbing and is at $39 billion.

Despite Bitcoin’s return to $97,000, futures volume did not see a significant increase, and the implied volatility (IV) for major expiries did not rebound substantially, reported Greeks Live this week.

“The derivatives market has not yet entered a structurally bullish phase. The current trading structure appears more like a reactive response to the sudden surge, with the long-term outlook still not shifting toward a bull market.”

In addition to today’s batch of Bitcoin options, around 131,000 Ethereum contracts are also expiring, with a notional value of $436 million, max pain at $3,200, and a put/call ratio of 1. Total ETH options OI across all exchanges is around $9 billion.

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This brings the total crypto options expiry notional value to around $2.83 billion.

Spot Market Outlook

Total market capitalization has dipped a little over the past 24 hours to $3.32 trillion, but was still up 4% since the same time last week.

Bitcoin hit $97,000 twice on Thursday, but resistance was too heavy, resulting in a fall back to $95,670 during the Friday morning Asian trading session. Ether had a similar move just shy of $3,400 but also retreated to trade at a little over $3,300 at the time of writing.

The altcoins were mostly in the red, aside from Tron with a 2.4% gain. XRP, Dogecoin, Cardano, and Monero were seeing larger losses.