18,000 Bitcoin Options Set to Expire Today, What’s Ahead for BTC Price?

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As an experienced analyst, I have closely monitored the Bitcoin market and its derivatives for quite some time. Based on the latest developments, I believe that while the short-term outlook may show signs of a correction or even a potential decline in Bitcoin’s value due to upcoming options expirations and bearish sentiment, the long-term perspective remains bullish.

As a crypto investor, I’ve noticed an exciting development in the Bitcoin market this week. The price of Bitcoin broke through with a bang, soaring all the way up to $66,000. This strong move has set the stage for potential new all-time highs. However, I’ve been keeping a close eye on Bitcoin options data in the derivatives market. Based on this analysis, it seems that there might be a brief correction coming before the uptrend continues.

18,000 Bitcoin Options Set to Expire Today

According to Greeks.Live’s latest update, approximately 18,000 Bitcoin options are set to expire soon. The Put-Call Ratio for these options stands at 0.63, indicating that there are 0.63 puts (betting on a decrease in price) for every call option (betting on an increase). The Max Pain Point is calculated to be around $63,000, and the total value of these options amounts to a substantial $1.2 billion.

This week, the Bitcoin ETFs experienced substantial investment, fueled by the meme craze in the United States that pushed Bitcoin’s price past $65,000. In contrast, the wider crypto market outside this trend displayed vulnerability as trading volumes persisted in dwindling. This pattern is evident in the disparity between Bitcoin and Ethereum options data.

From my perspective as a researcher, CF Benchmarks’ findings indicate that investors have been purchasing more expensive short-term Bitcoin (BTC) futures options for downside protection on the Chicago Mercantile Exchange (CME), even after the recent softening of U.S. Consumer Price Index (CPI) inflation data was released.

As a CF Benchmarks analyst, I’ve observed Bitcoin surpassing the $66,000 mark in the wake of inflation data release. However, it’s worth noting that derivatives traders have shown a greater appetite for out-of-the-money (OTM) put options, as implied volatility for these contracts is notably higher than for calls. This disparity signifies heightened demand and premiums paid for protective puts, revealing a bearish stance among traders. They are hedging against the possibility of Bitcoin’s value taking a downturn.

Long-Dated Options Tilt Towards the Bullish Side

From my perspective as a researcher studying Bitcoin’s options market, there’s been a shift in volatility expectations for longer-term contracts. Instead of the typical steep volatility curve associated with short-term contracts, I’ve observed a more subdued one for puts and calls with extended maturities. This flatter curve indicates a slight inclination towards investors favoring call options over puts. In other words, they seem to hold a more optimistic view regarding Bitcoin’s future price movements.

As a researcher examining CF Benchmarks’ findings on Bitcoin options, I noticed an intriguing observation: the relatively even difference between longer-term put and call options could be a sign of heightened institutional participation. Institutional investors tend to exhibit less volatile sentiment compared to individual traders, which might explain this flattening trend.

According to my knowledge, CME Group intends to offer spot trading for Bitcoin to its users in addition to futures trading. With this new feature, traders can take advantage of basis trades and make profits by leveraging the gap between the futures contract price and the value of the underlying Bitcoin asset at the current spot market price.

Specifically the CME Group are looking at launching spot trading of #Bitcoin.
As a researcher studying financial strategies, I would describe this method as follows: By simultaneously holding a short position in Bitcoin and purchasing the spot Bitcoin at an annual percentage yield of 20%, hedge funds can capitalize on the basis difference between these two positions.
In effect taking BTC long positions will get cheaper.
— Willy Woo (@woonomic) May 17, 2024

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2024-05-17 09:56