Bitcoin options worth $530 million set to expire on Friday without bear market end in sight
- Bitcoin price remains largely unchanged at $29,100, with weekly option implied volatility at 25%.
- Half a billion dollars worth of expiring Bitcoin options contracts have a maximum pain point of $29,500, signaling the level at which losses will be incurred.
- The put/call ratio is 0.38 for Friday’s expiry, meaning long positions are paying for shorts.
Bitcoin price is at a six-week low as BTC options contracts worth $530 million are set to expire on Friday. The maximum pain point or the price at which the contracts would incur the highest financial losses is $29,500.
Interestingly, the notional value of the Bitcoin options contracts set to expire on August 4 is considerably lower than last week’s $2.09 billion.
Also read: Arbitrum price could trim losses with new Offchain Labs launch, while Bitcoin traders wait and watch
Bitcoin options expiry and BTC outlook
More than half a billion dollars worth of Bitcoin options are expiring on August 4, while BTC price is at a six-week low. Trade volume and volatility in Bitcoin remained relatively stable over the past two weeks.
Based on data from Greeks.live, around 18,000 option contracts are set to expire on Friday, with a put call ratio of 0.38. The maximum pain point is $29,500. According to the analytics firm, Bitcoin’s major term implied volatility has been in a nearly unilateral downtrend since March, which has kept Expiration Prices close to the maximum pain point for an extended period of time.
Bitcoin options Open Interest by expiration as seen on Greeks.Live
Options data signals that the ongoing bear market does not have an end in sight. It may take longer than expected for the asset to make a comeback. Marker participants continue to remain bearish, and more long contracts are being sold as puts of shorts.
Bitcoin and Ethereum prices continued to decline and the assets struggled to recover from the downtrend amidst rising regulatory uncertainty and the Curve Finance exploit that shook the DeFi ecosystem.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
