As the cryptocurrency markets continue to experience a period of relative stability, attention is shifting towards the potential effects of a significant Bitcoin (BTC) options expiry event scheduled for October 6. This event involves the expiration of approximately 14,000 Bitcoin options contracts, which have a combined notional value of around $400 million. While this expiry is smaller in scale compared to the previous week, it still holds relevance for market participants.
The “Max Pain” Point
Among the key considerations surrounding this options expiry is the concept of the “max pain” point, which is the price level at which the majority of open contracts exist and where most losses occur upon expiration. For these Bitcoin options, the max pain point is set at $27,000, which is approximately $700 below Bitcoin’s current spot price. This suggests that if the price of Bitcoin were to reach this point upon expiration, it would result in the most significant losses for traders holding these contracts.
The put/call ratio for these options stands at 0.89, indicating a relatively balanced distribution between sellers of long (betting on price increase) and short (betting on price decrease) positions. This suggests that the market sentiment regarding Bitcoin’s future direction is somewhat evenly split among traders.
Anticipated Market Movements
It is worth noting that Bitcoin has experienced an upward price trend throughout the week, with the influence of holiday-related factors contributing to lower trading volumes during Asian trading hours. Analysts have observed historical uptrends in crypto markets during October and the fourth quarter as a whole. However, there is significant positioning by traders in bearish put options, indicating the expectation of potential downward movements in the market.
In addition to Bitcoin options, there are also approximately 200,000 Ether (ETH) options contracts set to expire on October 6, with a notional value of $330 million. These Ether options exhibit a similar put/call ratio of 0.87 to that of Bitcoin.
Despite the options expiry event, the impact on spot markets remains uncertain. It often passes without any significant effect on the overall market. Currently, Bitcoin has experienced a 3% retracement from its recent peak at $28,500 and is trading around $27,700. Ether has also witnessed a 6.6% decrease since its Monday peak, with a current price of $1,630.
