How Will Today's $4.7 Billion Bitcoin Options Expiry Impact Crypto Markets?

The crypto markets have experienced a slight decline this week, with sentiment dampened following the US Securities and Exchange Commission's recent approval of spot Ethereum exchange-traded funds. 

Market volatility might have surged as a substantial $4.7 billion worth of Bitcoin options contracts were slated to expire on May 31.

This expiration involves 69,200 contracts, a notable increase from last week's figures, as month-end derivatives activity usually peaks, according to Deribit.

Bitcoin Options Expiry

The put/call ratio for this batch of Bitcoin options is 0.61, indicating more call (long) contracts expiring than put (short) contracts. The max pain point, where most losses will occur, is approximately $65,000, which is $3,500 lower than the current spot price.

There is substantial open interest (OI) in long positions, with strike prices at $70,000, $75,000, $80,000, and even $100,000, totaling $886 million in OI.

On the short side, the $60,000 strike price holds the most OI at $519 million. This suggests that derivatives traders remain optimistic about Bitcoin's future price increases.

The total notional value of all outstanding BTC options contracts is an impressive $19 billion.

Ethereum Contracts and Market Sentiment

In addition to today's large batch of Bitcoin options, about $3.7 billion in Ethereum contracts are also expiring. These 910,000 contracts have a put/call ratio of 0.84, indicating a more balanced mix of long and short positions compared to BTC contracts.

Ethereum futures aggregated open interest has been near all-time high levels this week at around $17 billion, fueled by speculation regarding the spot ETF decision.

Crypto Market Outlook

Spot markets typically show little reaction to options expiry events, but today's is substantial. Total market capitalization has remained stable at $2.68 trillion. The crypto markets have exhibited minimal movement over the past 12 days.

Bitcoin saw a 1.2% increase on the day, trading at $68,489 at the time of writing, while Ethereum dipped slightly to $3,751.

Most altcoins remain in the red, continuing their declines from recent days, with meme coins experiencing particularly significant losses.