On December 27, contracts worth over $14 billion in Bitcoin Options Expiry will occur on Deribit. This expiration is the biggest event on the market, accounting for 44% of all open interest in Bitcoin options. At the same time, $3.84 billion worth of Ethereum (ETH) options will expire. Options contracts allow traders to hedge against possible losses or speculate on the price of an asset.
This Friday’s settlement could result in $4 billion worth of Bitcoin options expiring “in the money” (ITM), providing purchasers with gains. To control risk, traders may roll over or liquidate holdings, but market instability is a real possibility. To prepare for new market dynamics in 2024, economists anticipate that open interest may move to the January 31 and March 28 expiries.
BTC Price Instability
Because this expiration event is more significant than others, the market is less certain about its direction. In a recent conversation, Luuk Strijers, the CEO of Deribit, discussed the possibility that a “snowball effect” may occur if the market continues to decline. The 0.69 open interest positions for puts and calls indicate that investors are more interested in betting on the price going up than they are in betting on the price going down.
However, the value of BTC, $99,297, has decreased significantly during the last several days. After the Federal Reserve increased interest rates, the price of Bitcoin reached a new all-time high of $108,26. Since then, it has decreased by more than thirteen percent. People have become less optimistic about the possibility of a typical “Santa rally.” At the moment, the value of the biggest coin is around $93,940, which is 2.2% lower than it was twenty-four hours ago.
Measures based on options demonstrate that the market is now uncertain about what to do. Those demonstrating the degree to which prices fluctuate are nonetheless very volatile (vol-of-vol). This sensitivity could cause prices to fluctuate rapidly, making things less stable, particularly for purchasers with a significant amount of money in their accounts.
Ethereum Faces Bearish
As this expiration date approaches, Ethereum ETH$3.526 looks weaker than Bitcoin. Some information from Block Scholes shows that the expected volatility for ETH calls has decreased. This clearly shows that fewer people want to bet on the bullish side. The put-call ratio for ETH, which is 2.06% in favor of puts, also shows a bearish view compared to Bitcoin’s more balanced outlook. Ether’s value has dropped 15% since it broke through a strong support level at $4,000. The cryptocurrency’s price has increased by 1.78% in the last day to about $34,000.
Bitcoin Price Impact
Many industry specialists believe that if the price of Bitcoin continues to stay within a confined range, investors may move their assets away from Bitcoin and toward other cryptocurrencies. According to QCP Capital, based in Singapore, other cryptocurrencies may become more popular as this record ends. The firm alerted investors: “As long as Bitcoin remains below $100,000, alternative cryptocurrencies may begin to play catch-up again.”
Also Read: Bitcoin Price Surge Impact on 2024 Cryptocurrency Landscape
Summary
Bitcoin and Ethereum options worth billions of dollars expire on December 27. Of the 44% are Bitcoin Options Expiry. The expiry could cause market turbulence as investors change their positions by rolling over or selling their shares. Bitcoin’s price has been fluctuating lately. It went from an all-time high of $108,268 to $93,940, which has changed how the market feels and what people expect from the “Santa rally.”
As Ethereum’s instability goes down, people are less optimistic about its future, and fewer buyers are betting on its upward rise. Experts in the field think that other cryptocurrencies might become more popular if Bitcoin’s price stays in a narrow range. People are guessing about the future of Bitcoin and Ethereum because the market is unclear. Options and open interest will play a big role in this.
