Bitcoin and Ether Brace for Turbulence: $15 Billion Options Expiry Looms – What's Next?

As the $15 billion options expiry approaches, Bitcoin and Ether may experience significant price fluctuations. According to analysts, dealer hedging could contribute to volatility, particularly around the $70,000 mark.

Deribit Faces Multi-Billion-Dollar Crypto Options Expiry Wave, Could Impact BTC and ETH Prices

The impending expiry of Bitcoin (BTC) and Ether (ETH) options contracts worth billions of dollars could lead to bullish price movements. Deribit, a leading cryptocurrency options exchange, is set to settle quarterly contracts valued at $15.2 billion. Bitcoin options represent the majority, accounting for $9.5 billion, while Ether options make up the rest.

The massive scale of this expiry, one of the largest in Deribit's history, is expected to eliminate a significant portion of open interest across maturities for both Bitcoin and Ether. Notional open interest, reflecting the dollar value of active contracts, is a key metric affected by this event.

Options Expiration Wave Stirs Concerns Over Market Volatility: Traders and Market Makers Hedge Bitcoin Price Risks

A considerable amount of options are poised to expire in-the-money (ITM), meaning the strike price favors the option holder. This situation, combined with recent price rallies, could exert upward pressure or increase volatility in the market.

Dealers and market makers are engaged in hedging activities, with significant gamma positioning around the $70,000 strike for Bitcoin. As the expiry nears, forced hedging actions may intensify volatility around this level, leading to choppy price movements.

Gamma measures the rate of change in an option's delta concerning shifts in the underlying asset's price. Market makers utilize gamma to adjust their exposure and maintain a neutral position while providing liquidity in the market.