Traders Focus on the $6.8B Bitcoin and Ether Options Expiry

Traders Focus on the $6.8B Bitcoin and Ether Options Expiry

In the past two weeks, the crypto market saw a significant increase in bullish sentiment as Bitcoin, the leading cryptocurrency by market value, jumped more than 15% in its best performance since March. A major event is here; it could affect the price of Bitcoin and other cryptocurrencies.

If you’re a crypto trader, here’s some news for you. Nearly $6.8 billion in Bitcoin and Ether options expired on June 30, fueling massive price swings for the world’s two largest cryptocurrencies.

These options give traders the right to buy or sell the underlying crypto at a specific price within a certain period. As the options expire, traders and investors have to decide whether to exercise those rights or let them lapse.

For Bitcoin, around 87,000 options contracts worth over $4.2 billion just expired. The largest chunk, 31,000 contracts, gives traders the right to buy Bitcoin for $40,000 per coin. If enough traders bought at that price, it could send Bitcoin soaring past $40K for the first time in a while. On the flip side, if most traders let their options expire worthless, it may signal weakening enthusiasm and drag prices down.

The situation is similar for Ether, with $2.6 billion in options up for expiration, including 25,000 contracts betting Ether will reach $1,500.

As a crypto trader, options expirations often mean one thing—volatility. With over $6.8 billion in Bitcoin and Ether options expiration on Friday, traders are bracing for potential price swings.

When options expire, traders are forced to decide whether to exercise those options or let them expire worthless. For call options, traders must determine whether to buy the underlying crypto. For put options, they must decide whether to sell. The buying and selling actions can lead to big price movements in either direction.

  • If most traders exercise call options, it could drive a surge in buying pressure and send prices higher.
  • If most traders exercise put options, it may lead to a wave of selling that pushes prices lower.

Of course, the opposite is also true. If most options expire worthless, it removes a source of buying or selling pressure and could lead to sideways, range-bound price action.

Leading up to the expiration, traders closely watched Bitcoin and Ether price levels to determine if call or put options are “in the money”—meaning exercising them would lead to a profit. For Bitcoin, traders’ focus is on the $40,000 and $45,000 levels. For Ether, the $1,500 and $1,700 levels are key.

A move above or below these prices could trigger a rush to exercise options for a profit, sparking a price rally or sell-off. However, if prices remain range-bound around current levels, most options expire worthless and limit volatility.

While no one knew exactly how prices would react around these massive expiries, the sheer size of them means the potential for bigger swings is there. Of course, the market could end up taking it in stride. But as a trader, it’s best to be aware of these major events and prepare for the possibility of choppier action, in case you want to adjust stops or take some chips off the table. The aftermath often provides opportunities too, once the dust settles.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.