On Friday, bitcoin (BTC) and ether (ETH) options contracts worth of a whopping $4.8 billion will expire on Deribit, the popular crypto options exchange.
As per the report, nearly 10% of total contracts are Bitcoin options, roughly worth 1.217 million, while the remaining belongs to Ethereum. Each contract is tied to the cryptocurrency it represents.
Options are derivatives that allow the purchaser to buy or sell the underlying entity at a pre-determined price at a given date.
Luuk Strijers, the chief commercial officer at Deribit, stated in the interview, “Quarterly expiries are typically the most significant in terms of volume and value. For instance, last June witnessed expiries totaling $5.4 billion, while March saw $5.2 billion. The current quarter is consistent with the preceding ones in 2023.”
Furthermore, he stated that, “This September, $3 billion in BTC options and $1.8 billion in ETH options will expire, with the Max Pain level close to current price levels.”
Bitcoin and Ether are digital currencies, and people can make bets on their future prices using something called options. These options have a specific price point where they can cause the most financial pain for the people who bet on them. For Bitcoin, this price point is $26,500, and for Ether, it’s $1,650. Right now, Bitcoin is trading at $26,100, and Ether is at $1,580.
The idea behind this “max pain” point is that the people who create these options want to keep the prices of Bitcoin and Ether close to these levels when the options expire. This way, they can make it really hard for the people who bet on different prices to make money. They do this by buying and selling the actual Bitcoin and Ether in the regular markets.
Right now, experts don’t expect big price swings in Bitcoin and Ether as these options expire. This is because the way traders are using these options doesn’t suggest there will be a lot of volatility. For Ether, it seems like many traders are betting on prices around $1,650-$1,700, and for Bitcoin, it’s similar.