Traders Bracing for Crypto Expiry Showdown: Will Bulls or Bears Prevail?

Bitcoin’s price surged past $112,500 on September 5 amid the expiry of $3.38 billion in Bitcoin options, with the cryptocurrency showing resilience in the face of historical trends that typically see September as a weaker period for crypto markets. The price increase of 1.77% was notable, with traders and analysts closely monitoring the market for signs of volatility.

According to data from Deribit, the max pain level — where the most options are likely to expire worthless — was set at $112,000, and the put-call ratio stood at 1.41, suggesting a bearish tilt and cautious sentiment among traders. Open interest for Bitcoin stood at 30,447 contracts, and implied volatility (IV) had rebounded to around 40% following a month-long correction that had driven Bitcoin’s price more than 10% below its all-time high. Analysts observed a notable surge in block trading of put options, which accounted for nearly 30% of the day’s options volume, indicating a defensive stance among traders.

In parallel, Ethereum also faced a significant options expiry, with $1.29 billion in notional value at stake and open interest at 299,744 contracts. The max pain level for Ethereum was set at $4,400, with a put-call ratio of 0.77, indicating stronger demand for call options and potential upside optionality. However, Ethereum’s implied volatility had surged to over 70%, reflecting heightened expectations for price swings following its recent correction.

Analysts have historically noted September as a month of subdued volatility and weaker performance for cryptocurrencies, with factors such as institutional rollovers and quarterly settlements often influencing capital inflows. The options market has shown a lack of confidence in September’s performance, with traders adopting a risk-averse approach amid broader market corrections and declining crypto-related equities. On-chain analytics firm CryptoQuant reported that Bitcoin’s Value Days Destroyed (VDD) metric indicated easing selling pressure from long-term holders, suggesting a potential easing of downward pressure on the market if this trend continues.

Looking ahead, the market remains underpinned by uncertainty. Traders are bracing for potential volatility as Bitcoin and Ethereum prices tend to gravitate toward their max pain levels in the run-up to expiry. The key question remains whether the expiry will pin the prices near current levels or act as a catalyst for further price movements. If historical trends persist, September could continue to challenge bulls, but the defensive positioning in the options market suggests that any unexpected upside could trigger aggressive repositioning.