As the cryptocurrency market prepares for the quarterly options expiry on Friday, traders are closely monitoring the bitcoin put-call ratio, which has turned increasingly pessimistic. This significant event, with over $10 billion in options contracts set to expire, could potentially impact the market’s volatility and stability.
Key Takeaways:
- The bitcoin put-call ratio on Deribit has risen to 1.66, indicating a bearish sentiment among traders.
- Quarterly options expiry on Deribit, with over $10 billion in contracts set to expire, could lead to increased market volatility.
- The spot price nearing the max pain point of $61,500 may help mitigate some of the volatility around the expiry.
- The “quadruple witching” event in U.S. markets could also influence the cryptocurrency market’s behavior during this period.
Bitcoin Put-Call Ratio Signals Bearish Sentiment
The put-call ratio for bitcoin options on the Deribit exchange has risen to 1.66, indicating that more investors are betting on or hedging against a price decline rather than an increase. A ratio above one suggests that put options, which are bets on the price going down, are being traded more heavily than call options, which are bets on the price going up.
Quarterly Options Expiry: A Potential “Quadruple Witching” Event
Today marks the quarterly options expiry for both outstanding Bitcoin and ether contracts, with a combined notional value exceeding $10 billion set to expire on Deribit. This significant event represents more than 40% of Deribit’s current open interest. According to Deribit CEO Luuk Strijers, this large quarterly expiry could be potentially influenced by a “quadruple witching” and related volatility in U.S. markets.
A quadruple witching occurs four times a year, around the end of each quarter, when contracts for index futures, index options, options, and futures all expire simultaneously. The large volume of contracts expiring can impact spot prices, as the unwinding of positions and the rolling over of contracts can lead to significant price movements.
Max Pain Point: A Potential Mitigating Factor
However, the spot price nearing the max pain point of $61,500 might mitigate some of this effect. The max pain point represents the level where most options will expire worthless, potentially leading to reduced volatility and increased market stability around the expiry.
“Friday’s large quarterly expiry could be potentially influenced by a ‘quadruple witching’ and related volatility in U.S. markets,” said Deribit CEO Luuk Strijers.
As the cryptocurrency market prepares for this significant event, traders and investors will closely monitor its behavior and potential impact on the broader digital asset ecosystem.