Eyes on the price of BTC and ETH: in less than 21 hours, options contracts on Bitcoin and Ethereum worth 15 billion dollars will expire.
The price of the cryptographic king and queen could experience extreme volatility, as traders aim to keep BTC at $70,000 and ETH at $3,500.
Let’s see all the details below.
Summary
Tomorrow 15 billion Deribit options on the Bitcoin and Ethereum markets will expire: what will be the impact on the price?
We all know by now that the cryptocurrency market reacts more or less hysterically based on certain events of a temporal nature: one of these is the expiration, scheduled for tomorrow, of options on Bitcoin and Ethereum for 15.2 billion dollars.
As we can see within the derivatives trading platform Deribit, on March 29th contracts on BTC and ETH worth respectively 9.5 billion dollars and 5.7 billion dollars will expire, with the price of both coins potentially experiencing a rollercoaster situation.
We remind you that Deribit represents the largest cryptocurrency options platform in the world, with an 85% market share, followed by Binance, Okx, and Bybit.
This is a deadline that will lead to the expiration of 40% of the total notional open interest of Bitcoin and 43% of that of Ethereum, with a probably decisive impact on the short-term price action of the two assets.
As experts point out, like Luuk Strijers from Deribit, many of these options are destined to expire “In The Money” (ITM), meaning with profits in favor of traders who have benefited from the rise in prices of the entire crypto market.
This could lead to a strong price increase for the two cryptos, with extreme volatility on the horizon.
These are his words in a recent interview with Coindesk:
“These levels are higher than usual, which can also be seen in the lower maximum levels of pain. The reason is, of course, the recent price increase. Higher levels of ITM expirations could lead to potential upward pressure or volatility in the underlying.”
Traders’ confidence in the price movement of the Bitcoin and Ethereum markets, as highlighted by Strijers, is justified by the low level of “max pain price” which is respectively at 51,000 USD for BTC and 2,600 USD for ETH.
Usually institutional traders seek to bring the price of an underlying asset as close as possible to this level, with the aim of inflicting the maximum loss on call option buyers. However, in this case, it seems that buyers are destined to close their positions at a profit, triggering a possible rally.
Attention to possible spikes in the area of 70,000 USD for BTC and 3,500 USD for ETH, as we approach the deadline, flash incursions around these levels will become more and more likely.
According to David Brickell, head of international distribution at the Toronto-based cryptocurrency platform FRNT Financial, the cause can be found in the positioning of coverage by several dealers, short of 50 million dollars of Gamma while most orders are concentrated around the identified price ranges.
Fasten your seat belts, and avoid opening high leverage futures positions, given the high probability of being liquidated by an unpredictable market move.
Also pay attention to the date of April 5th for Ethereum, because on that occasion options with a relatively low open interest will expire, but with a notional value of calls higher than the current one (expiration on March 29th) and with a max pain price equal to 3,500 USD.
For Bitcoin the next date to watch is April 26, with another $5 billion in expiring positions.
Analysis of the price of crypto BTC and ETH
While options traders are in fibrillation for the expiration of a flood of contracts, Bitcoin and Ethereum are struggling to maintain their price within a bullish structure.
In detail on BTC, after yesterday’s afternoon movement in which the shorts went to take the liquidity set just below the $72,000 level, long traders have returned to the scene, bringing the asset’s prices above the pre-dump price.
In the 4h chart we can clearly see how the crypto n°1 for market capitalization is holding well above the EMA 50, recovering from a brief dip in the previous days.
Indicatively, the price zones to keep under control are $71,500 USD, as if broken, it could accelerate volatility to the upside, and $68,000 USD, below which we could go hunting for a “V shape recovery” pattern or for immediate liquidity absorption.
It could be a good idea to place a purchase order down there, assuming a temporary crash and a subsequent recovery.
If there is a break to the upside instead, let’s expect a quick reach of 74,000 USD:
For Ethereum the situation is similar but with a more downward/sideways trend.
ETH prices are also above the EMA 50 on the 4h chart, but they have not yet recovered from yesterday’s short dump.
The selling pressure, triggered by the negativity inflicted by the SEC’s decision delay on an ether spot ETF, could still be felt for a while as options traders await tomorrow’s expiration.
Pay attention to the level of 3,500 USD which is crucial to protect in order to fuel the hopes of the bulls to see the crypto above 4,000 USD in the short term.
For an immediate restart, the first goal is the break of 3,650 USD, which would open the doors to a phase of violent price increase.
If there is a decline, let’s prepare to see the currency below 3,300 USD, and possibly even close to 3,100 USD.
The strategy of placing a purchase order at these levels (generally -10% from current values) remains valid even in this case, trying to take advantage of market volatility.
