All eyes on the price of BTC and ETH: options contracts on Bitcoin and Ethereum worth 15 billion dollars will expire in less than 21 hours.
The price of the crypto king and his queen could run into extreme volatility as traders aim to hold the $70,000 mark on BTC and the $3,500 mark on ETH.
Let’s see all the details below.
15 billion Deribit options expire tomorrow on the Bitcoin and Ethereum markets: what will be the impact on the price?
We all know by now that the cryptocurrency market reacts in a more or less hysterical manner based on certain temporal events: one of these is the expiration, scheduled for tomorrow, of options on Bitcoin and Ethereum for 15.2 billion dollars.
In fact, as we can observe within the Deribit derivatives trading platform, on March 29 contracts on BTC and ETH of respectively 9.5 billion dollars and 5.7 billion dollars will expire with the price of both coins which could experience a roller coaster situation.
Recall that Deribit represents the largest crypto options platform in the world, with a market share of 85%, followed by Binance, Okx and Bybit.
This is a deadline that will lead to the evaporation of 40% of theopen interest total notional of Bitcoin and 43% of that of Ethereumwith a probably decisive impact on the short-term price action of the two assets.
As experts, such as Luuk Strijers from Deribit, point out, many of these options are destined to expire”In The Money” (ITM)i.e. with profits in favor of traders who benefited from the rise in prices of the entire cryptographic market.
This could result in a situation of strong price increases for the two cryptocurrencies, with extreme volatility on the horizon.
These are his words in a recent interview with Coindesk:
“These levels are higher than usual, which can also be seen in the low maximum levels of pain. The reason is, of course, the recent rise in prices. Higher levels of ITM maturities could lead to potential upward pressure or volatility in the underlying.”
Options bettors’ confidence in the price performance of the Bitcoin and Ethereum market, as Strijers points out, is justified by the low level of “max pain price” which is located at USD 51,000 for BTC and USD 2,600 for ETH respectively.
Institutional traders usually try to bring the price of an underlying as close as possible to this level, with the aim of inflicting maximum loss on call option buyers. In this case, however, it seems that buyers are destined to close their positions in profit, triggering a possible rally.
Watch out for possible spikes in the area of 70,000 USD for BTC and 3,500 USD for ETHgiven that as we get closer to the expiry, flash incursions around these levels will be increasingly likely.
The cause, according to David Brickell, head of international distribution at Toronto-based crypto platform FRNT Financial, is to be found in the hedging positioning by several dealers, short of $50 million of Gamma while the majority of orders concentrate around the identified price ranges.
So fasten your seatbelts and avoid opening highly leveraged futures positions, given the high probability of finding yourself liquidated by an unpredictable market move.
Also pay attention to the April 5th date for Ethereumbecause on that occasion options will expire with a relatively low open interest, but with a notional value of the calls higher than the current one (expires March 29) and with a max pain price equal to 3,500 USD.
For Bitcoin, the next date to watch out for is April 26, with another $5 billion in positions expiring.
Price analysis of BTC and ETH cryptocurrencies
While options traders are fretting over the expiration of a flood of contracts, Bitcoin and Ethereum struggle to maintain their price within a bullish structure.
In detail on BTC, after yesterday’s afternoon movement with which the shorts went to take the liquidity set just below the 72,000 USD level, the long traders returned to the fore, bringing the prices of the asset above the pre-dump price .
In the 4-hour chart we can clearly see how the no. 1 crypto by capitalization remains well above the 50 EMA, recovering from a brief decline in the previous days.
Indicatively, the price zones to keep under control are 71,500 USDas if broken it could accelerate upward volatility, and $68,000below which we could be looking for a “V shape recovery” pattern or a liquidity grab and immediate absorption.
It might therefore be a good idea to place a buy order around there, assuming a temporary crash and subsequent recovery.
In case of an upward break, however, we expect a rapid hold of the 74,000 USD:
For Ethereum the situation is similar but with a more downward/lateralization trend.
ETH prices are also above the 50 EMA on a 4-hour chart, but have not yet recovered from yesterday’s short dump.
The selling pressure, resulting from the negativity inflicted by the SEC’s delayed decision on a spot ether ETF, may be felt some more as options traders await tomorrow’s expiration.
Watch out for the USD 3,500 level which is essential to protect to fuel the bulls’ hopes of seeing the crypto above 4,000 USD in the short term.
For an immediate restart, the first goal is the breaking of 3,650 USD, which would open the doors to a phase of violent price rise.
In the event of a decline, let’s prepare to see the coin below 3,300 USDand possibly even close to 3,100 USD.
Also in this case the strategy of placing a purchase order at these levels (generally -10% current values) remains valid, trying to exploit the market volatility
