Bitcoin Put-call Ratio Tops 1.6 amid End-of-June Options Expiry

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As a seasoned crypto investor with a few years of experience under my belt, I’ve learned to keep a close eye on options expiries and their potential impact on the market. The upcoming quarterly Options expiry for Bitcoin and Ethereum contracts on Deribit, with a combined notional value of $10 billion, is no exception.

Prior to the quarterly Options expiry on Friday, the put-call ratio for Bitcoin (BTC) has become pessimistic. On that day, the quarterly options for both Bitcoin and Ethereum (ETH), amounting to a notional value of $10 billion, are set to expire on Deribit.

This event holds significant importance since it accounts for over 40% of Deribit’s existing open positions.

Bitcoin Price at Maximum Pain Point 

As a crypto investor, I’m keeping a close eye on the upcoming Bitcoin options expiries based on Deribit’s end-of-June data. A significant number of 107,000 Bitcoin options are set to expire with a maximum pain point at $61,500, translating into a notional value of a substantial $6.6 billion. With the put-call ratio for Deribit’s Bitcoin options reaching an elevated 1.66 in the run-up to today’s expiration, I’m bracing myself for potentially volatile market conditions.

Significantly, a ratio greater than one indicates that more put options than call options are being bought. This ratio represents the number of investors protecting against or anticipating a price drop rather than those hoping for a rise. At the time of writing, Bitcoin was priced at $61,675.52, marking a 0.88% increase over the previous 24 hours.

The current price of the coin shows that it is still within the max-pain point ahead of today’s expiry. Bitcoin may eventually stay at a level where the most options will expire worthless. As a result, traders may just position themselves to gain from this alignment. In the long run, this will potentially translate to reduced volatility and increased market stability around the expiry point.

As an analyst, I’d say: I believe that this quarter’s large expiry on Deribit could be impacted by the volatility associated with “quadruple witching” events in the US markets. These occur four times a year and typically coincide with the end of each quarter, when contracts for index futures, index options, options, and futures all expire at once. CEO Luuk Strijers holds a strong conviction that these concurrent expiries could influence today’s market behavior.

“Contrarily, the vast number of contracts set to expire on June 28 may influence current market prices. As traders unwind their positions and transition to new contracts, these actions could lead to substantial price fluctuations.”

Historical Bitcoin Options Expiry Figures

These expiries are historically common in the Bitcoin world.

On May 10, approximately 18,000 Bitcoin options with a put-call ratio of 0.64 and a Maxpain price of $62,000 were in existence. These options had a combined notional value of around $1.15 billion as they neared their expiration dates. The lower-than-average put-call ratio of 0.64 indicated that a greater number of long contracts (calls) than short contracts (puts) were set to expire.

In April, the Bitcoin options expiry aligned with the fourth Bitcoin halving event, resulting in over 21,845 Bitcoin options expiring. The total value of these options was approximately $1.35 billion. Notably, the put-call ratio stood at $0.63. It’s clear that the put-call ratio for June is significantly higher than in previous months.

As a researcher, I’m frequently asked by stakeholders about potential price trends after an expiration date. Given the significant notional value at stake, they’re eager to understand if similar patterns will recur.

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2024-06-28 16:09