This coming Friday, the main cryptocurrency futures and options market Deribit will see the expiration of around 85,000 bitcoin options contracts. The total value of these contracts is approximately $2.3 billion.
According to the data provided by Deribit, almost 700,000 Ethereum options with a total value of more than $1.2 billion are scheduled to expire on May 26.
“This Friday a total value of USD 3.6 billion will expire, which equals approximately 26% of Deribit’s open interest,” the platform claimed in a recent tweet. “This figure equals approximately 26% of Deribit’s open interest.”
It was explained there that the most popular digital currency, Bitcoin, has a Put Call Ratio of 0.38, which indicates a higher number of profitable bets.
The maximum pain point for Bitcoin, also known as the point or strike price where the greatest number of open options interest will expire worthless, is now located somewhere around $27,000.
This level is extremely noteworthy since it has the potential to serve as a pivotal support or resistance region, which will cause price changes to be more pronounced.
When measured in dollars, the impressive value of Bitcoin contracts that are approaching their expiration dates is currently sitting at $2.2 billion. This startling number brings to light the significance of the forthcoming contract expiration as well as the potential impact it may have on the market.
The Put Call Ratio for Ethereum, the second-largest cryptocurrency, is currently at 0.49, which indicates a slightly increased proportion of bearish sentiment among investors.
The expiration date of around 700,000 Ethereum options contracts is May 26, and the total notional value of these contracts is little more than $1.2 billion.
Also traders are focusing their attention mostly on the maximum pain price, which is now projected to reach 1,800 dollars for Ethereum. This level has the ability to serve as a focal point for market movements and could have an effect on the cryptocurrency’s short-term volatility.
As the contract expiration dates for Bitcoin and Ethereum get closer, market participants should be prepared for the possibility of short-term volatility.
The termination of these contracts carries the possibility of inducing momentary price fluctuations. Potential ramifications reverberating throughout the entire cryptocurrency industry.
“In the meantime, Implied Vol remains at rock bottom level,” Deribit stated in the tweet. “With DVOL trading at 50 for BTC and ETH, and shorter-dated even lower but climbing slightly,” he said.
“The levels of bitcoin and ether are identical, which is really unusual looking back through history. We experienced a similar rock bottom IV situation in January of this year, which led to significant increase.
Investors continue to be concerned about the debt ceiling and the next move that the Federal Reserve will make, which has made it difficult for cryptocurrencies to gain momentum.
Even if the United States government is able to extend the debt ceiling before the June 1 deadline. Economists believe that it might still have a negative impact on risky assets such as equities and cryptocurrencies. This is due to the issue of additional US Treasuries could reduce the amount of liquidity that is present in the market.
Fixed-income assets, such as instruments with a term of one year, which now offer a return of 5.15 percent. Those are typically appealing investment possibilities in times of economic uncertainty.
According to a report by Reuters, the assets held by money market funds in the United States reached a new all-time high of $5.8 trillion this week. This occurred as investors focused their attention on short-term debt instruments.
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