How Will Markets React to $2.1B Crypto Options Expiring?

Another Friday is here again, and another batch of Bitcoin and Ethereum options contracts is expiring as spot markets retreat from their recent rally.  

Around 24,600 Bitcoin options contracts will expire on Friday, Mar. 20, with a notional value of roughly $1.7 billion. This event is smaller than last week’s, which was also quite negligible, so it is unlikely to affect spot markets.

Crypto prices have been in decline over the past few days following the Federal Reserve’s hawkish outlook for the rest of the year. Total capitalization has declined by $75 billion since Monday, and volatility and volumes have dwindled.

Bitcoin Options Expiry

This week’s batch of Bitcoin options contracts has a put/call ratio of 0.96, meaning that the longs and the shorts are relatively evenly matched. Max pain is around $70,000, according to Coinglass, which is pretty close to current spot prices, so many could be in the money on expiry.

Open interest (OI), or the value or number of Bitcoin options contracts yet to expire, remains highest at the $60,000 strike price on Deribit, with $1.5 billion in bearish bets. Total BTC options OI across all exchanges has been climbing this month, reaching $44 billion.

“With the quarterly settlement week approaching, Bitcoin may enter a period of relatively low volatility unless major events occur,” noted crypto derivatives provider Greeks Live on Thursday.

In addition to today’s batch of Bitcoin options, around 176,500 Ethereum contracts are also expiring, with a notional value of $377 million, max pain at $2,150, and a put/call ratio of 1.0. Total ETH options OI across all exchanges is around $9 billion.

This brings the total notional value of crypto options expiries to around $2.1 billion.

Spot Market Outlook

Spot markets have ended the week in the red, declining a further 1.3% on the day, dropping total capitalization to $2.48 trillion.

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Bitcoin has moved back to the middle of its sideways channel, dipping below $69,000 briefly on Thursday before recovering to trade at just over $70,000 during the Friday morning Asian session.

Ether prices have lost another 3% on the day, falling back to the $2,100 level, and are in danger of losing the psychological $2,000 zone again as momentum from this week’s rally dissipates.

Altcoins are mostly in the red again with larger losses for Hyperliquid, Zcash, and Toncoin.

If these Bitcoin range breakouts keep failing, “then it will be hard for a prolonged relief bounce to happen,” said analyst ‘Daan Crypto Trades.’

“All we’re seeing now is a sweep of shorts into further downside since this downtrend began.”