Cryptocurrencies

$1.6B in Bitcoin and Ethereum options set to expire after Fed rate cut

Article Image

The cryptocurrency market is preparing for significant volatility today, as nearly $1.6 billion worth of Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) options are set to expire. 

This coincides with the Federal Reserve’s recent decision to cut interest rates by 50 basis points (bps), which has already sparked a rally in crypto prices. 

According to data from Deribit, approximately $1.26 billion in Bitcoin options contracts will expire, with a put-to-call ratio of 0.85 and a maximum pain point of $58,500. 

The term "maximum pain" refers to the price level at which the most options expire worthless, causing the greatest financial impact on traders. 

Similarly, Ethereum options worth $308.16 million will expire, with a maximum pain point of $2,350 and a put-to-call ratio of 0.65, indicating market sentiment that leans slightly toward price increases. 

The Federal Reserve’s rate cut has already had a noticeable effect on the market. 

Bitcoin surged past the $63,500 mark, rising from $59,000, while Ethereum jumped from $2,293 to $2,482. 

Both assets have since stabilized, with Bitcoin trading at $62,890 and Ethereum at $2,450 at the time of writing. 

Analysts at Greeks.live observed a significant drop in implied volatility across all major maturities following the Fed’s decision, with short-term volatility declining by over 25%. 

They noted that market expectations for a sharp short-term selloff had subsided. 

Despite the current upward momentum, traders are advised to remain cautious. 

Historically, options expirations often lead to short-term market fluctuations, and the next few days will determine whether Bitcoin and Ethereum can sustain their growth or enter a period of correction. 

At press time, the Bitcoin price was $62,970.48, while the Ethereum price was $2,451.34.

Disclaimer
Grafa is not a financial advisor. You should seek independent, legal, financial, taxation or other advice that relates to your unique circumstances. Grafa is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on the information provided directly or indirectly by use of this platform.
Publisher
Grafa