Crypto market braces for weekend volatility with $5B BTC options set to expire

In this post:

  • Crypto markets head into the weekend on negative sentiment, with Bitcoin struggling to maintain the price above $30K.
  • Almost $5 billion worth of Bitcoin options are scheduled to expire today, marking the largest mass expiration in months and posing a risk of market volatility.
  • Ethereum options worth around $2.3 billion are also set to expire on June 30.

Historically, the crypto markets have suffered from weekend volatility. This weekend is no exception. A massive amount of Bitcoin options are slated to expire today, according to crypto market analysts, marking the largest bulk expiry in months. Derivatives trading fever has recently risen in response to many ETF registrations, but will speculators get burned?

Crypto markets head into the weekend on negative sentiment

On June 30, approximately $4.8 billion in notional value Bitcoin options contracts will expire. It is the most significant batch expiry of BTC options contracts in several months, which may cause some market volatility. The put/call ratio is 0.56, which means that there are nearly twice as many call (long) contracts as put (short) contracts.

The ratio is derived by dividing the number of put (short) contracts by the number of call (long) contracts. Because more derivatives traders trade long contracts than short contracts, values less than one are considered bullish.

In addition, the maximum pain threshold is $26,500. The price with the most open contracts is the maximum pain threshold. It is also the price at which the most losses will be incurred upon the expiration of the contract. Adam Cochran, a partner at Cinneamhain Ventures, remarked that market volatility may be forthcoming.

Additionally, there are approximately $2.3 billion worth of Ethereum options with a notional value that expire on June 30. Similar to these, the put/call ratio is 0.58. The contract’s maximum pain point is $1,700.

Crypto market outlook

Since Bitcoin’s big rise on June 21, crypto markets have remained stagnant. The current market capitalization, which is $1.23 trillion, represents a daily increase of 2.4%.

Nonetheless, for the second time this year, the BTC price has been unable to surpass resistance at current levels. At the time of writing, the asset was trading 2% higher on the day at $30,758. Ethereum had gained 2.2% and was changing hands for $1,844 during the morning of June 30.

As Asia markets opened on Friday in Hong Kong, bitcoin was trading sideways, largely unaffected by the news that financial services behemoth Fidelity Investments resubmitted an application for a spot bitcoin ETF or by surprisingly robust U.S. economic data.

Fidelity joined Blackstone, Invesco, and WisdomTree in filing spot BTC ETF applications with the SEC, which has been happening in the past two weeks. These initiatives have encouraged investors and pushed up crypto prices.

Ether, the second-largest crypto by market value, was recently traded at $1,844, essentially unchanged from Wednesday at the same time. SOL, the token of the Solana smart contracts platform, has risen by more than 14% in recent days.

Following in the footsteps of Ethereum’s “Liquid staking token” (LST) mania, crypto traders on the Solana blockchain have leveraged their SOL token derivatives in pursuit of high yields via a convoluted re-leveraging process. The emergence of this trend follows Drift Protocol’s Tuesday release of a new service, “Super staking,” which bundles the entire cycle into a single click operation.

What’s happening in traditional finance?

The U.S. equity markets largely disregarded positive economic data – a revised 2% increase in GDP and a decline in weekly unemployment claims – that suggested inflation would remain problematic and offered potential support for the Federal Reserve’s plans to increase interest rates twice more in 2023. In the past year, such monetary hawkishness has repeatedly unnerved asset markets.

At the Fourth Conference on Financial Stability hosted by the Banco de Espana, Fed Chair Jerome Powell expressed central bank ambiguity regarding the appropriate inflationary treatment in the coming months, despite indicating in recent weeks that the Fed would raise interest rates in the coming months.

Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go […] We see the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.

Jerome Powell

Despite having a reputation for volatility, a particular bitcoin metric has consistently increased, demonstrating bitcoin investors’ confidence in the asset as well as their propensity to hold BTC.

Bitcoin is at an all-time peak, according to data from on-chain analytics firm Glassnode, despite enduring a bear market that drove the price from a high near $70,000 in 2021 to about $16,000 at the beginning of 2023. Bitcoin is currently valued at approximately $30,000.

However, more than 55% of the bitcoin supply has not moved since 2021, reflecting a 10% decline during the period.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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