Crypto markets could see increased volatility as $2.40 billion in Bitcoin (BTC) and Ether (ETH) options contracts are set to expire on May 3.
Subsequently, options are derivative contracts that allow traders to speculate on future price movements without owning the asset.
According to Deribit, a crypto derivatives exchange, 23,367 Bitcoin option contracts worth $1.39 billion will expire on Friday. This move shows the put-to-call ratio for BTC options sitting at 0.5, with a maximum pain point of $61,000.
Notably, the put-to-call ratio compares several put options (bets on lower prices) to call options (bets on higher prices). In line with this, a ratio below 1 is considered bullish. Meanwhile, the latest maximum pain point of Bitcoin is anticipated to inflict losses on options holders.
For Ethereum, 334,248 ETH option contracts valued at $1 billion will expire on the same day. These have a 0.37 put-to-call ratio favoring calls, and a $3,000 maximum pain point price.
Historically, the expiration of large options tranches preceded short-term turbulence and volatility in spot crypto markets. Likely due to traders taking offsetting positions or rolling over options positions into new contracts.
In CoinGecko’s data, Bitcoin and Ether saw bearish price action, dipping 20% from highs in the past two weeks as selling pressure mounted. BTC trades below $60,000, while ETH is under $2,900.
Nevertheless, Cointelegraph’s report emphasized that crypto markets may rebound and regain momentum within days after large option expiries cleared out. Leveraged traders may take the opportunity to spark volatility and profit from volumes.
Still, the significant concentration of options expiring could result in wild price swings for Bitcoin and Ethereum in the coming week.