Coin World News Report:
As $5.2 billion worth of Bitcoin and Ethereum options are set to expire this week, the cryptocurrency market may be preparing for greater volatility.
Considering the price performance over the past two days, the top two ranked cryptocurrencies by market capitalization appear to be heating up in anticipated volatility. In terms of background, Bitcoin dropped from its high of $69,000 on Monday to $66,848, a decrease of over 3.5%, while Ethereum fell 4.4% from $2,752 to $2,631 at the time of writing.
Will Bitcoin hit its maximum pain point?
It is worth noting that these contracts will expire at 8:00 UTC on Friday. Data from Deribit shows that $4.2 billion is set to expire in Bitcoin options contracts, with the maximum pain point for these contracts being $64,000. In the context, the maximum pain point is the price at which options traders suffer the greatest loss.
According to common belief, market makers typically push the price towards the maximum pain point to decrease the profits of traders. Thus, the volatility increases in the market prior to the expiration of options.
Meanwhile, the put-call ratio remains at 0.62, indicating a slight bullish sentiment among options traders. Considering Bitcoin’s recent breakout above $69,000, the market sentiment is expected to be bullish, according to bookmakers.
It is worth noting that the expiring options worth $4.2 billion in Bitcoin account for 16.26% of the total trading contracts. Surprisingly, 83.74% of the options expiring on Friday heavily rely on the price movement of Bitcoin, adding to the expected volatility.
Ethereum nearing maximum pain point
With approximately $1 billion worth of Ethereum options contracts expiring on Friday, the king of altcoins is just 1% away from its maximum pain point. At the time of writing, the trading price of Ethereum is $2,631, while the maximum pain point is $2,600.
It is worth noting that the open interest rate for bearish Ethereum options is 0.95, indicating a bearish outlook among traders. The open interest for bearish contracts is nearly equal to that of bullish contracts, with 194,050 and 205,155 respectively.
Furthermore, the dominant bearish outlook on Ethereum’s price reflects its underperformance compared to other high-quality assets. In terms of background, Ethereum is the worst-performing cryptocurrency among the top five ranked by market capitalization, with only a 2.07% growth in the past 30 days.
Earlier, Matt Hougan, Chief Investment Officer of Bitwise, noted that Ethereum is the best contrarian bet of the year. The executive stated that the bearish sentiment surrounding the asset is the reason for its poor price performance. However, he expects Ethereum to rebound by 2025.
