Bitcoin Shows Stronger Call Bias Than Ethereum as $4 Billion Options Expire

TLDR

Table of Contents

Bitcoin’s open interest shows a strong call bias, indicating a bullish outlook.
Ethereum’s call options dominate, but with less bullish sentiment than Bitcoin.
Max pain prices for both assets are far above current levels, risking call losses.
Traders maintain call-heavy positions, showing cautious optimism despite price drops.

Nearly $4 billion in Bitcoin and Ethereum options contracts are set to expire today on Deribit, with traders maintaining a bullish outlook despite recent price drops. Bitcoin’s open interest shows a strong preference for call options, signaling optimism for a price recovery. Ethereum follows a similar trend, though with slightly less bullish sentiment. As expiry looms, volatility could surge, creating significant market movements across both cryptocurrencies.

Bitcoin’s Bullish Call Bias Leads the $4 Billion Expiry Event

Today, over $3.9 billion worth of Bitcoin and Ethereum options contracts are set to expire on Deribit, a major derivatives exchange. The expiry event is significant, given the recent price volatility in the cryptocurrency market. Despite sharp price drops earlier this week, traders remain largely optimistic, particularly for Bitcoin.

Bitcoin’s open interest stands at a staggering 39,389 BTC contracts, valued at $3.39 billion. The data indicates a strong preference for call options, which are bets on price increases. Of the total contracts, 25,920 are calls, compared to 13,468 puts, resulting in a put-call ratio of 0.52. This ratio suggests that traders are leaning toward a bullish view, even though Bitcoin has recently faced price pressure.

As of today, Bitcoin is trading at $86,195, a drop of 7.02% in the last 24 hours. Despite the downturn, traders remain committed to their call options, anticipating price recovery. The max pain price for Bitcoin is set at $98,000, which is 14% higher than the current trading level. Max pain refers to the strike price where most options contracts become worthless, thus maximizing losses for holders. The gap between the current price and the max pain price indicates that many traders could face significant losses as the expiry nears.

Ethereum’s Call Options Reflect a More Cautious Optimism

Ethereum, though still showing a call-heavy positioning, demonstrates a less bullish sentiment compared to Bitcoin. Ethereum’s open interest consists of 185,730 ETH contracts worth $524 million. Of these, 108,166 are calls, and 77,564 are puts, yielding a put-call ratio of 0.72. This ratio indicates a preference for calls but shows a more balanced outlook compared to Bitcoin’s strong call bias.

Ethereum’s price stands at $2,822, experiencing a 6.98% decline in the last 24 hours. Like Bitcoin, Ethereum’s traders are positioning for a price rebound, with strike prices concentrated around $2,900 and $3,100.

These levels suggest that traders are expecting a potential recovery, but with less intensity than seen in Bitcoin. The max pain price for Ethereum is at $3,200, approximately 13% above its current price, highlighting the risk of options expiring out of the money if Ethereum’s price remains below these levels.

Volatility May Persist After the Expiry Event

Both Bitcoin and Ethereum are facing a crucial test as their options contracts near expiry. Despite the recent sharp price declines, the majority of traders are holding onto their bullish call positions. Analysts from Deribit suggest that light downside hedging signals cautious optimism.

“Flows lean toward calls across the upper strikes while downside hedging remains light,” the analysts wrote. This suggests that traders are not significantly adjusting their positions in response to recent price drops, implying that they view the current market weakness as a correction rather than the beginning of a bear market.

However, there remains the potential for increased volatility in the hours leading up to the expiry. If Bitcoin and Ethereum prices recover toward their max pain levels, traders with short-dated call options could find themselves in a favorable position. On the other hand, further price declines could trigger selling pressure as the value of call options diminishes, leading to additional losses for those holding bullish bets.

Market Sentiment Remains Positive Despite Price Fluctuations

As the $4 billion options expiry approaches, market sentiment appears to remain positive, with many traders holding call positions despite recent price drops. Both Bitcoin and Ethereum are experiencing lighter downside hedging, signaling that investors are confident that the recent dips are temporary.

However, the proximity of max pain prices to the current market levels for both assets highlights the risk of significant price movements, which could lead to a sharp market reaction.

The large options expiry event today is a reminder of the complexities of the cryptocurrency market, where even with volatility, traders are maintaining a cautiously optimistic outlook. Whether this optimism will hold or be tested by further price fluctuations remains to be seen, as the final hours of the options expiry unfold.