Cryptocurrency markets are bracing for potential turbulence as Bitcoin and Ether options contracts valued at a combined $2.4 billion near their expiration date on May 3, raising the possibility of heightened volatility.
Investors closely monitor the put-to-call ratio to gauge market sentiment, with a ratio below 0.7 signaling bullish sentiment and a ratio surpassing 1 indicating a bearish outlook.
Data from the Deribit exchange reveals that 23,367 Bitcoin contracts, valued at $1.39 billion, are set to expire on May 3. The put-to-call ratio for Bitcoin options stands at 0.5, with a maximum pain point identified at $61,000, representing the price level where the highest number of investors could face financial losses.
Similarly, 334,248 Ether contracts, with a notional value of $1 billion, are also slated to expire on Friday. These contracts exhibit a put-to-call ratio of 0.37, with a maximum pain point identified at $3,000.
Historically, the expiration of options contracts has ushered in short-term price volatility in the cryptocurrency spot market. Recent weeks have seen both Bitcoin and Ether facing bearish pressures, with Bitcoin dipping below $60,000 and Ether falling under $2,900, marking nearly a 20% weekly correction post-halving.
However, the cryptocurrency market has demonstrated resilience in the face of options-led volatility, often rebounding within days of expiry. Investors remain watchful as the market navigates these significant contract expirations.