Crypto Traders Brace for $8.5B in Bitcoin and Ethereum Options Expiry Today

The crypto market is on high alert as Bitcoin (BTC) and Ethereum (ETH) prices have declined by more than 7% today. Crypto traders are preparing for significant volatility and a potential downturn in anticipation of the monthly Bitcoin and Ethereum options expiry.

$8.5 Billion in Bitcoin and Ethereum Options Expiry Sparks Jitters

According to crypto derivatives exchange Deribit data, more than 89K Bitcoin options, with a notional value of $7.4 billion, are set to expire today. The put-call ratio has dropped to 0.46, a level typically associated with bullish sentiment.

In the last 24 hours, put volume has surpassed call volume and put/call ratio of 1.12 signals bearish sentiment rising after the crypto market crash. The implied volatility of BTC has increased significantly, with the main-term options around 45%.

Moreover, the max pain price is at $90,000 and the probability of expiring above the $82K strike price is significantly higher, as per the data. Crypto traders anticipate that BTC will consolidate between $82K and $85K pending further signals from macroeconomic factors, ETF activity, and overall market sentiment.

The demand for downside protection has increased, showing traders are cautious even as positioning is still skewed bullish, according to Deribit.

Meanwhile, over 432K Ethereum options with a notional value of almost $1.18 billion are set to expire today. The put-call ratio is bullish at 0.70, but traders have already liquidated their positions amid sudden price swings.

The max pain point is $3000, above the current market price near $2736. Moreover, traders expect prices to remain below $2,800 until next week.

In the last 24 hours, Ethereum put volume has remained significantly higher than call volume. The put-call ratio is 1.48, indicating bearish sentiment among options traders.

Experts told CoinGape that the $2,500 level for ETH provides strong support. This week, the volume and proportion of large-volume options transactions remained high. Also, market makers and active traders have cash on hand and a willingness to trade, with the greatest demand for put-back defensive strategies.

Crypto Traders Brace for Further Downside Risks

Expiry of Bitcoin and Ethereum options and traditional financial derivatives could increase price swings, as traders scramble to close or roll over positions. All eyes are on how both the crypto market and equity markets absorb the latest shock.

With the damage from the bearish bias now done, traders are awaiting the release of the December US Producer Price Index (PPI) inflation data later today for cues on the upcoming market direction. The monthly PPI is projected at 0.2%, and headline inflation is forecast at 2.7%, lower than the previous figure of 3%.

Moreover, President Trump is expected to nominate Kevin Warsh as Federal Reserve Chair, with Polymarket indicating a 94% probability for Warsh. 10x Research claimed hawkish Warsh could prompt further selling pressure in Bitcoin and the broader cryptocurrency market.

Bitcoin long-term holder behavior has shifted bearish, whales continue to liquidate holdings, and stablecoins witnessing off-ramps since December in response to Warsh as a potential candidate.

“These developments tie not only to the December Fed meeting but also to the likely nomination of Kevin Warsh, an outcome that may have been an open secret within the White House inner circle for the past six to seven weeks,” 10x Research added.

BTC is currently trading at $82,576 following a 7% decline over the past 24 hours. The 24-hour low and high are $81,071 and $88,330, respectively. Meanwhile, Ethereum is trading at $2,735 after a modest rebound.