Bitcoin and Ethereum have held steady as billions worth of options contracts expired this morning.

The leading cryptocurrency rose 1% early Friday morning, while ETH jumped 1.6%.

Bitcoin is now trading at $26,509, down 11% over the past 30 days. Over that same period, the second-largest cryptocurrency by market cap has dropped 4.6%.


Today, Bitcoin options on Deribit expired this morning with a notional value of $2.26 billion and $1.25 billion for Ethereum, inducing uncertainty in the market.

Notional value refers to the total number of outstanding option orders in the market that have yet to expire.

The Bitcoin options market had a put-to-call ratio of 0.44. Similarly, for ETH, every put option had two call open options opened. This suggests that traders mostly held bullish positions, which is likely why the price reacted negatively before the expiry.

An option call contract is a financial derivative that gives the holder the right, but not the obligation, to buy a specific asset—in this case, Bitcoin—at a predetermined price. A put option gives the holder the right to sell.

When an investor purchases a call option, they are essentially betting that the price of the underlying asset will rise above the strike price before the option expires. The strike price represents the pre-determined price at which the option is bought.


For instance, a May call option for a strike price of $27,000 would mean that for the buyer to turn a profit, the price must be higher than $27,000 at its expiration.

Usually, the market has a tendency to fluctuate toward maximum pain point close to option expiration. The max pain point for today’s expiration event was $27,000 for Bitcoin and $1,800 for Ethereum, roughly current prices.

Deribit options expiration.
The maximum pain point for Bitcoin May options contract on Deribit. Source: Deribit

The maximum pain point in the options market refers to the price level when options buyers will incur maximum losses.

Bitcoin, Ethereum low liquidity takes hold

It was expected that the current low-liquidity market conditions would have exacerbated the impact of the options expiration event.

Bitcoin’s liquidity dried up in Q2 2023 due to events such as the end of Binance’s zero-fee trading program, the banking crises, and macroeconomic issues like the ongoing debt-ceiling debate in the United States.

Co-founder of crypto research outlet Jarvis Labs Ben Lilly measured the decline in liquidity using the cumulative volume delta (CVD) metric for spot and futures markets. CVD measures the cumulative change in the volume of buy and sell orders as the price moves.

It’s used to analyze the flow of volume and can provide insights into the strength or weakness of a trend or price movement.

Lilly found that the spot CVD has declined dramatically since mid-April, indicating that traders are not showing any interest in driving the prices higher or lower.


Adding to the options expiration event, Lilly added that once May contracts expire, the market’s attention will turn toward June, which are currently showing a maximum pain level of $24,000 for Bitcoin and $1,600 for Ethereum.

“Once this unwind for May takes place and contracts expire, we’re now looking at June and the structure should be changing, which points to a pullback toward $24,000,” wrote Lilly.

Biyond Capital’s lead trader Nathan Batchelor echoed the above analysis.

“In low volume, low liquidity trading conditions such as now it is also possible the options actions could drive price volatility,” he told Decrypt. “Most of the high volume puts are seen around $25,250 so be careful of more downside on Friday if $25,850 is breached.”

Deribit analysts agreed with the possibility of a bout of volatility based on the historically low reading of short-term implied volatility, which preceded a market rally in January 2023.

Implied volatility is a measure of the market's expectation of the future volatility or price fluctuations of an underlying asset.

Deribit’s chief commercial officer Luuk Strijers told Decrypt that while the previous instance resulted in an upside, it “could have been a market crash as well.”

He expects the short-term volatility to rise and reduce the difference with long-term implied volatility to reinstate the sentiment that “lower volatility in Bitcoin is here to stay” before traders can confidently begin long-term accumulation or distribution.



The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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