Crypto Quill

New York, United States, March 28th, 2024 –– As the crypto market braces for a historic event, Bitcoin (BTC) and Ethereum (ETH) are on the edge of volatility. On Friday, the leading crypto options exchange, Deribit, will settle quarterly contracts worth a staggering $15.2 billion. This expiry is one of the largest in Deribit’s history, with BTC options accounting for $9.5 billion (62% of the total notional open interest due for settlement) and ETH options comprising the rest.

The Implications of In-The-Money (ITM) Expiries

Many of these options are set to expire in-the-money (ITM), meaning their strike prices are favorable compared to the current market rates. For BTC, approximately $3.9 billion worth of options are poised to expire ITM, representing 41% of the total quarterly open interest. Similarly, 15% of ETH’s total quarterly open interest of $5.7 billion is also on track to expire ITM.

The Call and Put Dynamics

To understand the impact, let’s delve into the world of options. A call option grants the buyer the right (but not the obligation) to purchase an underlying asset at a preset price on a later date. Conversely, a put option allows the right to sell. With ITM call options, investors can buy BTC or ETH at a lower price than the current market rate, potentially driving prices higher. However, this relationship isn’t linear, and volatility may come into play around the $70,000 price mark.

Other Influences on BTC and ETH Prices

Beyond options, other factors will shape BTC and ETH prices. The spot Bitcoin ETF accumulation trend has significantly impacted Bitcoin’s favor, propelling it to new all-time highs. Despite recent corrections, Bitcoin remains resilient, currently hovering around $70,738.23. Ethereum, closely correlated with Bitcoin, also maintains a high level of influence. As the crypto community awaits the expiry, the market’s response will be closely watched.