Monthly BTC Option Expiration Is Coming! Will This Impact The Crypto Market?


 Today the first monthly Bitcoin option will expire following the approval of the cash Bitcoin ETF earlier this month. Following the approval, the price of Bitcoin has remained highly volatile as it faced strong selling pressure and dipped below $40,000. Currently, Bitcoin is trading at $41,090 with a market capitalization of $805 billion.

Greeks.Live, a platform that focuses on options data, has provided an insight into options data on January 26. The platform reveals key figures for both Bitcoin (BTC).

Nearly 94,000 Bitcoin options will expire, featuring a Put Call Ratio of 0.51, a Maxpain Indicator at $41,000, and a notional value of $3.75 billion. For ETH, 932,000 options are nearing the close, showing a Put Call Ratio of 0.31, a Maxpain indicator at $2,300, and a total notional value of $2.07 billion.

The crypto market experienced a shock this week, with the recent grayscale sell-off directly linked to the launch of a Bitcoin cash ETF. Price volatility is seen to continue, marked by moderate long-term Implied Volatilities (IVs) falling, and some short-term IVs falling below the 40% threshold. The Put Call Ratio (PCR) has declined sharply, indicating reduced bearish activity, mainly characterized by more traders selling calls and less engaging in active calls.

With more than 30% of options approaching expiration today, there is an expectation that the margin released during this period could once again impact IV, contributing to the return of the Bitcoin option structure.

The price of Bitcoin has moved lower after the approval of the cash ETF and analysts expect a further decline to $35,000 before Bitcoin starts making its next surge. Market players are now optimistic about Bitcoin's halving scheduled for around 2024 with analysts predicting a rise starting after that.

However, some market analysts have warned! In 2024, Bloomberg's chief commodity strategist, Mike McGlone, estimates that Bitcoin will likely underperform the stock market on a risk-adjusted basis.

Despite the positive sentiment related to the approval of Bitcoin cash ETFs and the upcoming Bitcoin halving, macroeconomic factors may prevent this crypto's ability to reach new highs in 2024. McGlone emphasized that market expectations regarding the potential reduction of interest rates by the United States Federal Reserve, which usually support risk assets like Bitcoin, may not be accurate.