A large number of Bitcoin and Ethereum options contracts are about to expire. In addition, these events usually cause price fluctuations in the underlying assets.

There has been a significant shift in derivatives trading activity, with Ethereum options trading surpassing Bitcoin.

37,000 Bitcoin options are set to expire soon, with a notional value of just over $1 billion. However, this number is eclipsed by the 256,000 Ethereum options that are also set to expire this month. They have a notional value of a whopping $4.8 billion.

Industry analyst Colin Wu commented on the dramatic shift in derivatives trading.

Ethereum options expiration

Ethereum options are derivative contracts that allow traders to speculate on the price of ETH. They allow traders to buy or sell Ethereum at a specific price (the strike price) on a specific expiration date. They are also more flexible than futures, which have a fixed expiration date.

According to Deribit data, Ethereum open interest (OI) stands at nearly 2.6 million open contracts that have yet to be settled.

Additionally, Ethereum’s put/call ratio is 1.09. The put/call ratio is calculated by dividing the number of put (short) options traded by the number of call (long) option contracts traded. Numbers above 1 are bearish because more traders are buying short (sell) contracts than long (buy).

The biggest pain point for Ethereum options is $1,800. This describes the strike price of the most open contracts. It is also the price at which the asset will cause financial losses to the largest number of option holders upon expiration.

For Bitcoin options, things look even more bullish with the put/call ratio at 0.51. This suggests that more long contracts are being bought than short contracts.

Furthermore, BTC’s maximum pain price is $28,000, which is very close to where the asset is currently trading.

Cryptocurrency Market Outlook

Crypto markets were flat on the day, with total market capitalization hovering around $1.2 trillion. Additionally, the top ten cryptocurrencies saw little movement, with the exception of Dogecoin (DOGE), which fell 8.6% following Elon Musk’s Twitter intervention.

Ethereum is currently changing hands at $1,870, cooling off from its mid-week and seven-month high of $1,920.

When all of these Ethereum options contracts begin to expire this month, there could be further downward pressure.

Ethereum’s blockchain has reportedly seen a notable surge in large transactions over the past two weeks – the type of transactions typically associated with more market confidence.

Furthermore, recent data seems to indicate that 40% of transactions on the Ethereum network are ETH block trades. A classic case of buying the rumor and selling the news?

Well, historically, major upgrades have attracted strong demand in the days leading up to the main event. These transactions could be related to the large trades executed in late March. Furthermore, the data also highlights that demand for ETH is currently outstripping selling pressure, as indicated by calls being higher than puts. These observations seem to be in line with the influence of bulls on the market.

The boost is not limited to large transactions. In fact, Glassnode found that the retail sector is also actively responding to the Shanghai upgrade countdown. For example - the number of addresses holding at least 0.01 ETH is now at a new ATH. Can ETH maintain its bullish demand?

While transaction flow may not necessarily paint a clear picture of what is happening in the market, looking at whale flow may be a better option. This is because whales have more control over the direction of the market.

Interestingly, the whale supply distribution shows that whales holding more than 1 million ETH in addresses have been buying. At press time, this category controls a total of approximately 24% of ETH's circulating supply. Here, it is worth noting that the same indicator shows a slowdown in derivatives demand over the past 24 hours.

This reflects the concurrently observed selling pressure, as well as the bullish momentum in ETH prices since early April.

ETH has once again fallen below the $1,900 price level, with an alternative value of $1,866 at the time of writing, confirming that despite the prevalent demand, selling pressure remains prominent.

In other words, if selling pressure prevails, ETH may struggle to reach $2,000 before scaling back. High leverage also makes it vulnerable to liquidation.