Key Points
- Bitcoin and Ethereum options contracts worth $2.04 billion and $590 million respectively, expired on 20th December.
- Market declines continue for both Bitcoin and Ethereum, with both assets trading below their max pain levels.
The crypto market experienced a surge in activity as major options contracts for Bitcoin (BTC) and Ethereum (ETH) expired.
On December 20, BTC options worth $2.04 billion and ETH options valued at $590 million expired, causing market fluctuations.
Market Reaction
Bitcoin’s Put-Call Ratio was 0.87, indicating a bullish sentiment, while Ethereum’s lower Put-Call Ratio of 0.5 showed stronger trader optimism.
The max pain point for Bitcoin was $101,000 and for Ethereum, it was $3,750. Currently, both cryptocurrencies are trading below these levels.
Such expirations often lead to short-term volatility, as traders adjust their positions post-expiry.
Continued Decline for BTC and ETH
Bitcoin has seen a 6.41% decline in the past 24 hours, and a 7-day decline of 5.10%, reducing its market cap to $1.88 trillion.
Ethereum, on the other hand, has experienced a sharper drop, losing 10.50% in 24 hours and 15.61% over the week, resulting in a market cap of $396.41 billion.
Bitcoin’s failed attempt to breach $110,000 and the ongoing market correction have contributed to these price pressures.
The recent expiration of Bitcoin and Ethereum options contracts worth $3 billion earlier this month also played a significant role in the current market trends.
As we approach the end of the year, ETFs are experiencing increased outflows, which are influencing market movements.
Market makers are aligning their positions with the high volume of expiring options, and block call options have accounted for over 30% of daily trading recently.
The expiration of over 40% of crypto options at year-end is likely to significantly decrease implied volatility.
Bitcoin’s price is currently stabilizing near $95,000, after falling below the $100,000 milestone for the first time in two weeks.
Analysts are predicting a potential recovery towards $100,000 as the market adjusts to the post-expiry dynamics.
Ethereum, however, continues to trade below its max pain point of $3,750, at $3,289.44.
Despite the broader market correction impacting both assets, historical patterns suggest that stabilization may occur in the coming sessions as traders adapt to the new price levels.