Bitcoin Options Expiry Nears With $15 Billion Contracts Set To Expire

Bitcoin is approaching one of its largest monthly options expiries of the year, with approximately $15 billion worth of contracts set to expire on Friday. This significant expiry is part of the $40 billion in open interest currently on Bitcoin options. The max pain point, where the most contracts would expire worthless, is at $102,000. The put-to-call ratio stands at 0.73, indicating a slight pessimism among traders regarding Bitcoin's price movements.

Bitcoin's implied volatility has decreased to 38.29%, the lowest level since October 2023. This suggests that traders have limited expectations for sharp price movements in the near future. The recent stability in Bitcoin's price, trading around $107,600, further supports this notion. The put-to-call ratio over the past 30 days shows that traders are only slightly pessimistic about Bitcoin's prospects.

Despite geopolitical uncertainties, Bitcoin has shown resilience, with its implied volatility dropping below 38. This is in contrast to Ethereum, whose implied volatility has remained in the 60 to 80 range for the past three months. Ethereum's higher implied volatility signals potential for larger price movements, as traders are hedging against or speculating on significant price changes, treating ETH as a higher-beta asset tied to DeFi and altcoin trends.

Analysts predict that volatility around Friday’s expiry will likely be muted, except perhaps during New York trading hours. There is a chance that Friday’s expiry could create favorable conditions for traders in the week ahead. If the price breaks out of the current range and ETF flows stay strong, fresh directional momentum could be seen into the weekend. Things could get especially interesting if Bitcoin retests $110,000, as fresh positioning coming into the market after that happens becomes more important to decide intermediate market direction.

Markets showing increased put volume, especially with strike prices below the current market price, would indicate a temporary downside, meaning traders are expecting a retrace. Conversely, strong spot flows with more volume around out-of-the-money calls would indicate a stronger chance of a proper all-time-high break, as Bitcoin inches towards its all-time high.