Markets brace for $14.6 billion BTC, ETH options expiry on Deribit

Bitcoin and Ether options worth more than $14.6 billion are set to expire Friday on Deribit, the world’s largest crypto options exchange. The expiry comes as traders increase demand for Bitcoin downside protection following a steep market pullback, while Ether’s positioning appears more balanced.

According to Deribit Metrics shared on X Monday, 56,452 Bitcoin call option contracts and 48,961 put option contracts are scheduled for settlement at the end of this business week. Together, they represent notional open interest worth $11.62 billion. 

The exchange’s data also showed that open interest (OI) is concentrated in puts at strike prices between $108,000 and $112,000, which is close to Bitcoin’s current market price at the time of this publication, consolidating around $110,000. 

There is an uptick in demand for near-the-money downside protection. Meanwhile, call options cluster at higher strikes of $120,000 and above, showing there are lingering hopes of an upside rebound.

In Ether’s case, call options total 393,534 contracts compared with 291,128 puts, a notional open interest of $3.03 billion. Concentrated activity appears in calls at strike prices of $3,800, $4,000, and $5,000. On the put side, positions are most prominent at $4,000, $3,700, and $2,200.

Neutral stance for ETH, protection for BTC

Deribit expiry positioning shows a difference in sentiment between the two leading cryptocurrencies, where the majority of the market believes Bitcoin could be pulled down further. However, Ether’s price correction is not enough to definitively split the numbers between bulls and bears. 

BTC and ETH open interest by strike price chart. Source: Deribit

“BTC expiry points to persistent demand for downside protection, while ETH looks more neutral,” the platform stated.

The exchange added that the expiry timing follows signals from Federal Reserve Chair Jerome Powell at last week’s Jackson Hole conference, which may help define the market tone for September.

As reported by Cryptopolitan last week, Powell suggested the possibility of an interest rate cut at the Fed’s next policy meeting on September 16-17. However, he stopped short of delivering a strong commitment, much different from last year’s conference, when policymakers broadly favored policy easing amid slowing labor conditions and lesser inflationary pressures.

Liquidations wipe out weekly gains, max pain theory in scope

In the last five years, the growth of the options market has made monthly and quarterly expiries closely watched events for digital asset prices. 

Market watchers began “max pain” theory discussions in 2021, which dictates that prices are pulled towards strike levels where the largest number of options expire worthless. If the values drop to such levels, this could cause a heavy collective loss on holders, or in other words, max pain.

It is still a matter of dispute within the crypto community since it has actually never happened, but traders continue to monitor it around expiry dates. Current max pain levels stand at $116,000 for Bitcoin and $3,800 for Ether, reference points for those who believe the effect is meaningful.

The latest options expiry also comes against a backdrop of $900 million in leveraged positions being liquidated to start the week. BTC and ETH both slumped by over 1.5%, alongside the broad US stock market index, S&P 500.

Data from Coinglass shows that Ether traders saw $320 million in forced liquidations. Bitcoin-linked liquidations followed at $277 million. Altcoins Solana’s SOL, XRP, and Dogecoin posted combined losses of about $90 million.

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