Will Markets Sink on $2.4B Crypto Options Expiry Event? 

There are around 23,000 bitcoin options about to expire on May 3. These have a notional value of around $1.4 billion which has been pretty similar to previous expiry events.

Crypto markets have been dumping hard all week but have recovered marginally in late trading on May 2. However, bitcoin remains under $60,000 and sentiment has turned bearish in the short-term.

Bitcoin Options Expiry

Today’s big batch of Bitcoin contracts have a put/call ratio of 0.49. This means that there are twice as many calls or long contracts expiring than puts or shorts.

The max pain point of these options is $61,000, which is a little higher than current spot prices. Max pain refers to the price at which most losses will be made upon contract expiry.

According to Deribit, there is still a lot of open interest at strike prices above $70,000. There is even $661 million in OI at the $100,000 strike price though the odds of BTC getting there in the short term are slim considering current market conditions.

Crypto derivatives solutions provider Greeks Live commented on this week’s launch of spot crypto ETFs in Hong Kong. Listings “failed to bring much incremental volume,” it said before adding that US spot Bitcoin ETFs continued to see outflows this week.

“The weakness of the market led to weakening market confidence,” it added before noting that implied volatility of all major terms continued to decline.

“The current IV level is the average watermark of the winter bull market, with some support, and the current buying is a good choice.”

Implied volatility is a measure of the future expected volatility derived from expiring crypto derivatives contracts.

May 3 Options Data
23,000 BTC options are about to expire with a Put Call Ratio of 0.49, a Maxpain point of $61,000 and a notional value of $1.4 billion.
330,000 ETH options are due to expire with a Put Call Ratio of 0.36, Maxpain point of $3,000 and notional value of $1… pic.twitter.com/mEA4PV98C3

— Greeks.live (@GreeksLive) May 3, 2024

In addition to today’s tranche of Bitcoin options, around 330,000 Ethereum options will also be expiring. These have a notional value of around $1 billion, bringing the total value of today’s crypto contract expiry event to $2.4 billion.

The ETH options have a put/call ratio of 0.36 and a max pain point of $3,000, a level recently reclaimed.

Crypto Markets Recover

There has been a slight recovery in crypto markets this Friday, with total capitalization gaining 4% to reach $2.35 trillion.

BTC gained a similar amount to trade at $59,600 at the time of writing, but it had yet to reclaim the psychological $60,000 level.

ETH had jumped above $3,000 following a 3.7% gain on the day. The altcoins were also recovering, with Solana (SOL), Dogecoin (DOGE), Toncoin (TON), Shiba Inu (SHIB), and Polkadot (DOT) posting solid gains.

However, they have all lost heavily since this year’s market high in mid-March.