In the final stretch of 2024, the cryptocurrency markets are witnessing an unprecedented event: the largest Bitcoin options expiry recorded, alongside substantial Ethereum contracts. Today, Bitcoin and Ethereum options worth a combined $18 billion are set to expire, signaling potential shifts for traders and investors amid these extraordinary circumstances.
Deribit data reveals a staggering 88,537 Bitcoin options contracts expiring, quadrupling last week's figures. Ethereum follows with 796,021 contracts, 4.5 times more than the previous week. The total value of Bitcoin options hitting a record $14.38 billion, while Ethereum options stand at $3.7 billion. Such soaring figures highlight traders' high-profit expectations and escalating demand for hedge strategies.
Crucially, Bitcoin options display a maximum pain price of $85,000, with a put-to-call (P/C) ratio of 0.69. A lower P/C ratio usually signals optimistic market sentiment, suggesting a bullish outlook. Nevertheless, the P/C ratio has marginally increased throughout the year's last quarter, suggesting enhanced hedging inclination.
David Lawant, Research Head at FalconX, noted, "With the rising demand for downside protection, the put/call ratio for December 27 options open interest surged from 0.35 in October to over 0.70, driven by players aiming to safeguard their 2024 performance metrics."
Contrastingly, Ethereum options feature a maximum pain price of $3,000 and a notably low P/C ratio of 0.41. The ratio drop from October's end suggests a growing bullish sentiment for ETH.
Bitcoin and Ethereum are currently trading at $96,300 and $3,300, respectively, far surpassing the listed maximum pain prices, which represent loss thresholds for option holders. This figure often serves as a predictive measure for future pricing movements in the eyes of some market participants, fueled by the idea that markets gravitate towards levels optimizing options sellers' profits.
Deribit remarked, "Given the market's strong upward leverage, any major downward shift might ignite a rapid cascade effect. This expiry will play a pivotal role in setting the tone for 2025."
The monumental Bitcoin and Ethereum options expiry undoubtedly presents a landmark moment for the crypto sector, shaping forecasts and strategies as the industry looks forward to the coming year.