Over $3 Billion in Bitcoin (BTC) and Ethereum (ETH) Options Expire Today

It comes after a lower-than-expected US CPI (Consumer Price Index) and cooler PPI (Producer Price Index) data.

Today, over $3.3 billion in Bitcoin (BTC) and Ethereum (ETH) options will expire, the largest batch since the beginning of the year. This comes after lower-than-expected US CPI and PPI data.

As the world’s largest economy continues to recover from the pandemic, any updates on major macroeconomic indicators are closely followed by traders across asset classes.

This is because they can affect broader market volatility and liquidity, especially in cryptocurrencies, which are known for their high volatility.

As of this writing, BTC is trading for $103,912. ETH is changing hands at $2,572.

Here’s a breakdown of the expiring options:

At least $2.76 billion in Bitcoin options will expire, with a maximum pain point at $100,000. This batch of options includes 26,543 contracts, up from last week’s 25,925 open interest. The put-to-call ratio is 1.02, indicating that traders are buying more puts (rights to sell) than calls (rights to buy), reflecting a bearish market sentiment.

Around $569.42 million in Ethereum options will expire, amounting to 219,986 contracts, a significant increase from last week’s 164,591 contracts. The maximum pain point is at $2,300, and the put-to-call ratio stands at 1.36, suggesting a bearish market outlook for ETH.

The “maximum pain point” in crypto options is crucial. It represents the price level at which option traders experience the most significant financial discomfort. For instance, if the strike price is at $100,000 and the options expire at $99,000, then those who sold puts at the $100,000 strike price will be in the red.

However, if the strike price is at $100,000 and the options expire at $101,000, then those who sold calls at the $100,000 strike price will be in the red.

As the options expire, market participants will be closely watching to see if the prices of BTC and ETH gravitate towards the strike prices or the max pain levels in order to minimize the payouts for the options sellers.

“BTC skew is neutral…price action could get interesting,” said analysts at crypto derivatives exchange Deribit.

Meanwhile, analysts at Greeks.live add that Bitcoin’s rejection from the $105,000 threshold came amid an overextended market. The analysts also note caution in the market, with defensive strategies emerging and traders preferring to sell rather than chase momentum.

“Several traders are taking profits on long calls and rotating into more defensive positions as they feel everybody rushed in,” said the analysts.

Lower US inflation may boost crypto demand

The expiring options also come after US CPI data for April showed that inflation cooled to 2.3%, the smallest reading since February 2021, and PPI inflation fell to 2.4%, below expectations of 2.5%.

Both figures also showed that April inflation dropped to 0.4%, compared to March’s 0.3% rise. Economists polled by InvestingRoundup had expected no change in both indexes.

According to analysts, while the April data flipped the narrative, markets may be underreacting to this shift. Lower inflation and fading retail could pressure the Fed to cut rates sooner, despite earlier Fed signals of maintaining stable rates amid tariff uncertainties and a 2% inflation target.

“Rate cuts are back in play, markets aren’'ms ready for what’s coming,” said crypto analyst Merlijn the Trader.

This typically boosts risk assets like Bitcoin and Ethereum, increasing demand for crypto options as investors seek leveraged exposure. Lower inflation lessens the pressure for monetary tightening, enhancing market liquidity, which drives up call option premiums.

But crypto prices saw slight short-term volatility post CPI and PPI, with options traders noting heightened activity, increased volumes, and tighter spreads.

While option expirations can cause sharp price movements, the impact is usually short-lived. The market generally stabilizes the next day, offsetting initial fluctuations.

Still, traders should analyze technical indicators and market sentiment closely before investing in this volatile environment.