Coin World News Report:
As $5.2 billion worth of Bitcoin and Ethereum options are set to expire this week, the cryptocurrency market may be preparing for greater volatility.
Considering the price performance over the past two days, the top two cryptocurrencies by market cap appear to be heating up for the expected volatility. In terms of background, Bitcoin dropped from its high point of $69,000 on Monday to $66,848, a decrease of over 3.5%, while Ethereum dropped 4.4% from $2,752 to $2,631 at the time of writing.
Will Bitcoin hit the maximum pain point?
It is worth noting that these contracts will expire at 8:00 UTC on Friday. Data from Deribit shows that $4.2 billion is set to expire in Bitcoin options contracts. The maximum pain point for Bitcoin options contracts is $64,000. In the context, the maximum pain level is the price that causes the maximum loss for options traders.
According to popular belief, market makers usually push the price towards the maximum pain point to reduce the profits of traders. Therefore, the volatility increases in the market prior to the expiration of options.
Meanwhile, the put-call ratio remains at 0.62, indicating a slight bullish sentiment among options traders. Considering Bitcoin’s recent breakthrough of $69,000, bookmakers expect a bullish market sentiment.
It is worth noting that the value of Bitcoin options contracts expiring, worth $4.2 billion, accounts for 16.26% of the trading volume. Surprisingly, 83.74% of the options trades expiring on Friday are heavily dependent on the price movement of Bitcoin, thereby increasing the expected volatility.
Ethereum nearing the maximum pain point
With approximately $1 billion worth of Ethereum options contracts expiring on Friday, the king of altcoins is only 1% away from its maximum pain point. At the time of writing, Ethereum’s trading price is $2,631, while the maximum pain point is $2,600.
It is worth noting that the put open interest rate for Ethereum is 0.95, indicating a bearish outlook among traders. The open interest for put contracts is almost equal to that of call contracts, with 194,050 and 205,155 respectively.
Furthermore, the dominant bearish outlook on Ethereum’s price reflects its underperformance compared to other high-quality assets. In terms of background, Ethereum is the worst-performing cryptocurrency among the top five by market cap, with only a 2.07% increase in the past 30 days.
Earlier, Matt Hougan, Chief Investment Officer at Bitwise, noted that Ethereum was the best reverse crypto bet of the year. This executive stated that the bearish sentiment surrounding the asset is the reason for its poor price performance. However, he expects Ethereum to rebound by 2025.