Crypto Market Loses $30 Billion Amid Options Expiry, Middle East Tensions

The cryptocurrency market is currently focused on the expiration of approximately 34,000 Bitcoin options contracts, valued at around $3.3 billion, set to occur on Friday, June 20. This event, while slightly larger than the previous week's options expiry, is expected to have a minimal impact on spot markets. The market has been under pressure all week, losing $30 billion since Monday, as crypto assets cool amid rising Middle East tensions.

This week's Bitcoin options contracts have a put/call ratio of 1.16, indicating a slight prevalence of short sellers over long positions. The max pain point is set at $106,000, approximately $1,500 above current spot prices, which is where most losses will be incurred upon contract expiry. Open interest (OI), or the value or number of BTC options contracts yet to expire, is highest at strike prices between $115,000 and $140,000, with more than $1.7 billion at each price, reflecting the bullish sentiment among speculators.

In addition to Bitcoin options, around 215,000 Ethereum contracts are also expiring, with a notional value of $546 million, a max pain point of $2,600, and a put/call ratio of 0.68. This brings Friday's combined crypto options expiry notional value to around $3.9 billion. The put/call ratio for Ethereum indicates a more balanced positioning near the max pain point, suggesting a different market sentiment compared to Bitcoin.

Crypto derivatives provider Greeks Live noted a "predominantly bearish sentiment" among traders, with key support levels at $104,000 and $100,000 being closely watched. There is significant concern about altcoins being negatively impacted if $104,000 is lost, with geopolitical tensions around Iran adding to market uncertainty. Traders are forced to adapt quickly in these volatile times as traditional gamma strategies underperform.

The total market capitalization has fallen by 2% to $3.37 trillion but remains within a range-bound channel that formed in early May. Bitcoin has been relatively flat over the past 24 hours, with a slight dip to $104,600 at the time of writing. Despite falling 3.8% from its weekly high of $108,770 on Tuesday, support levels continue to hold despite escalating geopolitical tensions in the Middle East. Ethereum prices are also holding above support at $2,500, with minimal movement over the past 48 hours. Altcoins were mostly flat, with Bitcoin Cash (BCH) gaining 7.7% while Hyperliquid dropped 4.8% on the day.

The expiry of these options contracts comes at a time when the cryptocurrency market is already experiencing heightened volatility. The recent price fluctuations have been driven by a variety of factors, including regulatory uncertainty, institutional investment, and market sentiment. The expiry of these options contracts could exacerbate this volatility, as traders adjust their positions in response to the expiry. The impact of these options contracts on market momentum will depend on how traders react to the expiry, with the potential for increased volatility as traders adjust their positions. The relatively balanced put/call ratio suggests that the market is in a state of equilibrium, with traders waiting for clear signals before making significant moves.