Bitcoin Ethereum Options Expiration May Trigger 15-20% Correction

Today, over $3.3 billion worth of Bitcoin (BTC) and Ethereum (ETH) options contracts are set to expire, which could lead to significant market fluctuations. This event has traders on high alert, as the expiration of such a large volume of options can influence short-term price movements.

Data indicates that Bitcoin’s maximum pain price is at $104,000, while Ethereum’s stands at $2,450. The maximum pain price is the price at which the most options contracts expire worthless, and it often serves as a psychological level for traders. The fact that these prices are lower than the current trading prices suggests a possible downward price trend in the near term.

Despite the bearish sentiment in the options market, analysts remain optimistic about the long-term prospects for both Bitcoin and Ethereum. The bearish sentiment is reflected in the put-to-call ratio for both cryptocurrencies, which is above 1, indicating that more traders are betting on a price decrease than an increase. For Bitcoin, the put-to-call ratio is 1.22, while for Ethereum, it is 1.27.

The notional value of the expiring options contracts is significant, with Bitcoin options amounting to $2.8 billion and Ethereum options exceeding $542 million. This large volume of expiring contracts could lead to increased volatility as traders adjust their positions in response to the expiration.

Interestingly, both Bitcoin and Ethereum’s maximum pain prices are lower than their current trading prices. According to the Max Pain theory, markets often gravitate toward these levels as expiration approaches, leading to a potential scenario where a higher number of options contracts expire worthless. This could result in a short-term correction for both cryptocurrencies.

Analysts suggest that a short-term correction of 15-20% could be on the horizon for Bitcoin, as many traders are opting for downside protection via put options. This could lead to a brief retreat to the $100,000–$103,000 range. However, the overall sentiment remains bullish, with many in the market anticipating that Bitcoin will continue its upward trend in the long term.

For Ethereum, the maximum pain price is noted at $2,450. Despite trading at $2,693, market dynamics suggest possible movements toward this maximum pain level as expirations loom. Ethereum has lagged relative to Bitcoin, failing to follow in Bitcoin’s footsteps toward its all-time high, with many expecting ETH to reach $3,000 by June.

While traders should brace for potential short-term volatility due to the expiration of these options, it’s essential to note that markets typically stabilize relatively quickly as participants recalibrate to new price levels. In summary, the upcoming expiration of options contracts carries the potential for short-lived price swings in both Bitcoin and Ethereum. However, despite prevailing bearish sentiments in options markets, many traders remain optimistic about the long-term prospects for both cryptocurrencies. Keeping an eye on maximum pain prices and market sentiment will be crucial for traders navigating this dynamic environment.