The cryptocurrency market is ending 2024 with a historic milestone: the largest Bitcoin and Ethereum options expiry ever recorded. Today, a staggering $18 billion worth of options contracts will expire, sparking excitement and uncertainty among traders and investors.
Data from Deribit reveals that 88,537 Bitcoin options contracts—four times more than last week—are set to expire today, totaling a record $14.38 billion. Ethereum options contracts expiring today amount to 796,021, valued at $3.7 billion, a 4.5x increase from the previous week.
The soaring value of expiring options indicates heightened trader expectations for profit and an increased demand for risk management.
The maximum pain price for Bitcoin options is $85,000, with a put-to-call (P/C) ratio of 0.69. Typically, a low P/C ratio below 1 reflects bullish sentiment, as more call options (bets on price increases) are being purchased. However, Bitcoin’s P/C ratio has trended upward throughout Q4, signaling rising hedging activity.
“Demand for downside protection has been rising for weeks, partially driven by players protecting their 2024 performance metrics. The P/C ratio on December 27 options open interest doubled from 0.35 in October to over 0.70,” commented David Lawant, Head of Research at FalconX.
For Ethereum, the maximum pain price is $3,000, with a P/C ratio of 0.41, down significantly from 0.97 in late October. This drop suggests a growing bullish sentiment among ETH traders.
At present, Bitcoin is trading at $96,300, and Ethereum at $3,300—both significantly above their respective maximum pain prices.
The maximum pain price is the level where holders of options contracts experience the most collective losses upon expiry. Markets often gravitate toward this price point as it maximizes profits for options sellers, typically large financial institutions.
Deribit has warned that the heavily leveraged market could face a rapid snowball effect if there’s significant downward movement, potentially creating volatility as the market heads into 2025.
“With the market heavily leveraged to the upside, any significant downside move could trigger a rapid snowball effect. All eyes are on this expiry to define the narrative heading into 2025,” Deribit commented.
The historic expiry is not just a testament to the growing scale of the crypto market but also a critical moment that could set the tone for the coming year.
December 2024, Cryptoniteuae