Bitcoin And Ethereum To Face Minimal Impact Ahead Of The Largest $11 Billion Year-End Options Expiry

As the calendar year draws to a close, Bitcoin and Ethereum prices are preparing for a significant event: the largest options expiry in its history, valued over $11 billion. However, contrary to what many might expect, tomorrow’s expiry seems to have minimal impact on the market.

Bitcoin Is Far From The Max Pain Point (MPP)

Bitcoin’s bulls are happy as BTC’s surge is going to favor their positions during tomorrow’s option expiry. Bitcoin (BTC) continues to show robust support, maintaining a position above $40,000 as we near the end of 2023’s final quarterly options expiry.

This Friday at 08:00 UTC, $7.7 billion in BTC options, along with $3.5 billion in ETH options, are set to expire on the Deribit crypto exchange.

The sum exceeding $11 billion sets a new record for Deribit, being the most substantial expiry to date. Notably, nearly $5 billion of these options are poised to expire profitably — the highest figure to date — which could trigger increased levels of hedging and trading activities than usual.

For Bitcoin, the put/call ratio is at 0.67, favoring bullish positions with call options standing at 106K. The notional value is $7.586 billion with the max pain point at $33,000.

Bitcoin’s MPP indicates where option buyers may face maximum losses at expiry. Options sellers often try to push Bitcoin’s price towards this point. However, it is believed that with the current MPP for BTC being far from its present price, there’s little likelihood of significant movement towards this point ahead of Friday’s expiry.

To minimize losses before the expiry, bears need to push the price down to $41,900. On the other hand, bulls aim for a rise above $44,000 to gain a $1.2 billion lead. This potential profit for call option holders might bring further price increases ahead of the ETF decision.

Ethereum’s $2,300 Trade Brings Confidence

This quarter witnessed a remarkable increase in crypto values, with Bitcoin soaring by 62% and Ethereum by 45%. This uptick has lured investors to chase higher gains through call options, leading to a high level of open interest with massive in-the-money (ITM) call options.

Examining Ethereum’s options data reveals that bulls have made big profits from their call options, especially as Ethereum’s price recently surpassed $2,300. Ethereum’s Max Pain Point (MPP) stands at $1,900, where the largest concentration of call options, worth a notional $259 million, are currently in the money (ITM). The put-call ratio stands at 0.51, indicating a strong preference for call options.

Given that Ethereum’s price is significantly above its MPP of $1,900, it’s unlikely to experience bearish volatility, maintaining a bullish sentiment in the market. However, to reduce losses, bears would aim to plunge Ethereum’s price below $2,200.

Conversely, with the second-highest concentration of call options at $2,500, valued at $238 million, bulls would benefit from pushing Ethereum’s price above $2,500 by 8 am ET on December 29th.