$18 billion in Bitcoin and Ethereum options expire today: Market braces for big moves

A record-breaking $18 billion in Bitcoin and Ethereum options expire today, sparking anticipation of sharp market moves and potential volatility.

Today marks a historic moment for the cryptocurrency market, with $18 billion worth of Bitcoin and Ethereum options contracts set to expire, the largest expiry ever recorded. This development could lead to unexpected volatility and significant opportunities for traders and investors.

For Bitcoin, the total value of expiring options has reached approximately $14.38 billion, while Ethereum’s options account for about $3.7 billion. The volume of contracts expiring today is striking—88,537 Bitcoin contracts and 796,021 Ethereum contracts—several times higher than last week’s figures. Such an increase reflects heightened activity and traders’ anticipation of profit or risk mitigation.

Bitcoin’s put-to-call (P/C) ratio is currently at 0.69, signaling optimism as more traders are placing bullish bets. Ethereum’s ratio has dropped to 0.41, suggesting even greater confidence in ETH prices rising. Lower P/C ratios indicate that more call options (bets on price increases) are being purchased compared to put options (bets on price declines).

At present, both BTC and ETH are trading well above their respective maximum pain prices. For Bitcoin, this price is $85,000, while for Ethereum, it is $3,000. The "maximum pain price" represents the level at which options buyers experience the most significant losses at expiry, often leading to market adjustments as prices gravitate toward this point.

David Lawant, Head of Research at FalconX, highlighted the rise in hedging sentiment as a possible reason for the upward trend in Bitcoin's P/C ratio during the last quarter of 2024. “Demand for downside protection has been rising,” he said, noting that traders may be looking to safeguard their year-end performance metrics. In October, Bitcoin’s P/C ratio for options expiring on December 27 was just 0.35 but has now doubled to over 0.70.

Ethereum’s sentiment shows a contrasting trend. The P/C ratio for ETH has sharply declined from 0.97 at the end of October to its current level of 0.41, reflecting growing bullishness. This shift indicates traders’ confidence in ETH's potential to sustain or increase its price.

With leveraged positions currently favoring the upside, sharp market movements could occur, especially if prices deviate significantly from expectations. Analysts suggest that this record-breaking expiry could shape the market’s narrative for 2025, as traders await further developments with heightened anticipation.

As the year comes to a close, the crypto market braces for possible price swings following today’s monumental options expiry. Investors should remain vigilant as the dynamics of these expiring contracts could define trends in the coming months.