- $4.7 billion in BTC and ETH options will expire, which may affect market volatility.
- The technical analysis on the chart shows us the possible price movements for Bitcoin and Ethereum after the option expires
In the financial markets today, all eyes are on the cryptocurrency sector, which is preparing for a major event.
Both bitcoins [BTC] and Ethereum [ETH] have seen significant swings recently, with Bitcoin up 1.4% and Ethereum up 0.7% in the last 24 hours, with current prices at $68,223 and $3,733 respectively.
This activity is notable, especially since Ethereum has outperformed with a 23.3% gain over the past two weeks, likely boosted by the recent approval of a spot ETF for the asset by the US Securities and Exchange Commission.
This set the stage for today’s (May 31) main event: the expiration of a colossal $4.7 billion in notional value of BTC and ETH options contracts.
Cryptocurrency decoding options
Options in the cryptocurrency market work similarly to traditional finance, where traders have the right, but not the obligation, to buy (call option) or sell (put option) the underlying asset at a set price before the contract expires.
The Deribit platform data revealed an expected increase in market volatility triggered by today’s options expiration. This is supported by the significant volume of Bitcoin and Ethereum options to be closed.
A closer look at the options market shows a higher number of call options, indicating bullish sentiment among traders. Specifically, the put/call ratio for Bitcoin is 0.61, indicating the dominance of bullish contracts.
The maximum pain point where option holders will suffer the maximum financial loss is fixed around $66,000, which is significantly lower than current trading prices.
Source: Deribit
Notably, options with strike prices ranging up to $100,000 carry significant open interest with a total notional value of $886 million. This optimism is sharply contrasted to the downside by the sizeable open interest of $519 million at a strike price of $60,000.
Notably, the current notional value for BTC call options is $2.9 billion.
Source: Deribit
For Ethereum, the scenario is slightly different different. On this day, the face value of $1.8 billion worth of Ethereum contracts will expire with a put/call ratio of 0.84.
This ratio suggests traders have a more balanced view of Ethereum’s near-term price prospects. Open interest in Ethereum futures is also peaking near all-time highs, driven by speculative trading following ETF approval.
Source: Deribit
Technical analysis and market forecasting
To understand how Bitcoin (BTC) and Ethereum (ETH) may react to today’s significant options expiration, a technical analysis of their respective charts is necessary.
Starting with Bitcoin, the daily swing structure places BTC in the premium zone, which is usually a signal for potential selling into the discount zone before a reversal.
A closer look at the lower timeframes reveals that Bitcoin has recently hit a critical supply zone on the 4-hour chart, indicating possible downward pressure.
Although there was no substantial downside break after testing this zone, the 2-hour chart confirms another test of the bid zone, suggesting a potential short-term decline to the $67,000 level, which may mark the market’s first structural break to the downside. 4 hour chart.
Source: TradingView
Similarly, Ethereum tested the supply zone on its 4-hour chart, indicating a possible downtrend as it remains in the premium zone on the daily chart.
The 2-hour chart of the asset shows minor structural breaks to the downside, indicating a continued downtrend towards the $3,500 level.
Source: TradingView
Against the backdrop of these technical moves, both cryptocurrencies have already caused losses for some traders.
According to Coinglass, Bitcoin traders faced $19.92 million in liquidations, while Ethereum traders saw around $19.63 million in liquidations.
Read Bitcoin (BTC) Price Prediction 2024-25
Next, the AMBCrypto message comment that the Relative Strength Index (RSI) and Money Flow Index (MFI) for Bitcoin are at 53.85 and 57.94 respectively.
These figures indicate a balanced market where neither buyers nor sellers have dominant control, leading to continued price consolidation or range-bound movements.