Bitcoin and Ethereum Options Expirations

Both Bitcoin and Ethereum are yet to show major price actions this week. However, the incoming expiration on Friday of more than 40% notional open interest

Bitcoin (BTC) and ether (ETH) options traders are bracing for a massive expiration on Friday that could set the tone for the two leading cryptocurrencies in the coming week.

Over 40% of the notional open interest in BTC and ETH on crypto options and futures trading platform Deribit is set to expire on Friday at 8:00 AM UTC, amounting to $6.68 billion in BTC options and $3.5 billion in ETH options, Deribit CEO Luuk Strijers told CoinDesk in an interview.

“This time around, 25% of the options are expiring in the money, which means that options holders are set to close out with a profitable outcome,” said Strijers, adding that the options open interest is lower compared to the past few months.

According to Strijers, the options expirations – particularly July 5 for ETH and July 12 for BTC – could catalyze a positive shift in the two cryptocurrencies’ ongoing short-term bearish market sentiment.

“Both markets have been trending down in the past weeks, and traders have been showing a preference for short-dated options, which could amplify the directional moves in either case,” he said.

“We've also seen a sell-off in the options markets over the past two weeks, which might indicate that options traders are expecting a downside move in the underlying,” Strijers added.

Highlighting the bullish case

Gustavo Faria, author and analyst at CryptoQuant, also presented some factors supporting the bullish narrative on Friday.

“One of the primary driving elements in the current trajectory of BTC and altcoins has been the US macroeconomic data,” Faria told CoinDesk in a Telegram message. “The uncertainty about the future of American monetary policy seems to be a key influence on investors' risk appetite.”

The US government will release its latest gross domestic product (GDP) and employment data on Thursday. On Friday, the administration will follow up with inflation data on personal consumption expenditures (PCE). All of these could shape up market sentiment in the short run.

“Externally, it seems like a bullish setup, but we'll have to see how the market reacts to the macroeconomic news and the options expirations,” Faria said.

“Internally, however, Bitcoin's structure presents signs of a possible local bottom,” he added. “Open interest in the BTC market has declined by around $3 billion in the past three weeks, which has been dominated by long liquidations. At the same time, the funding rates for perpetual contracts have settled near zero.”

“These signs of a greater balance between buyers and sellers are creating a healthier and less overly optimistic price structure,” Faria said. “Furthermore, BTC just tapped the realized price of short-term holders (STHs) at $62.6K.”

According to Faria, STHs are currently at a slightly negative average profitability, which is a point that has historically served as support for local corrections during uptrends.