Crypto markets are bracing for major volatility as many Bitcoin and Ethereum options expire. Today, 69,000 Bitcoin options expired with a put/call ratio of 0.37, a max pain point of $66,000, and a notional value of $4.7 billion.
Also Read: Weekly Crypto Price Analysis
Meanwhile, 920,000 Ethereum options expired with a put/call ratio of 0.46, a max pain point of $3,300, and a notional value of $3.5 billion. The market showed slight flatness this week, but May has been one of the best-performing months in the market’s history. The market atmosphere remains bullish at large.
There Is a Divergence Between Bitcoin and Ethereum
Bitcoin and Ethereum are moving in different directions, per Greeks.live data. Bitcoin’s implied volatility (IV) for all major terms has dropped to cooler levels, suggesting a calmer market. On the other hand, Ether’s IV remains high, indicating ongoing interest and potential price swings. Selling Ethereum to buy BTC and taking advantage of the cross-currency IV difference could be a good strategy, especially with the downward pressure on Ether’s IV.
Bitcoin (BTC) continues to trade at high levels, just below record highs. Meanwhile, data from Deribit shows a put/call ratio of 0.61 for expired Bitcoin options, indicating more calls (long contracts) than puts (short contracts). For Ethereum options, the put/call ratio is 0.46.
The max pain point, where most losses occur for leveraged traders, is $66,000 for Bitcoin and $3,300 for ETH. At press time, Bitcoin is trading at $68,171, over $2,000 above its pain point, and Ethereum is trading at $3,774, over $400 above its pain point.
Currently, open interest (OI) in Bitcoin options is high, with many long positions targeting strike prices of $70,000, $75,000, $80,000, and even $100,000. Some traders have placed long positions on BTC with a target price of $100,000. The number of long positions is significantly large, with $886 million in open interest at this strike price. The total notional value of all outstanding Bitcoin options contracts is $19 billion.
Economic Factors Are Affecting the Crypto Market
The crypto market is in a typical temporary bull market pause. However, some observers are concerned that recent macroeconomic factors could slow further gains. The two-year US Treasury yield is approaching 5%. This high return from government bonds, considered safe investments, might lead macro traders to move money out of stocks, cryptocurrencies, and other riskier assets. This could impact Bitcoin and Ethereum prices.
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Economic indicators are also influencing the market. The Personal Consumption Expenditures (PCE) Price Index is forecasted to have risen 2.7% annually in April, the same as in March. Month-over-month, a 0.3% increase is expected, following a 0.32% rise in March. The core PCE, which excludes food and energy prices, is expected to rise 2.8% annually and 0.3% monthly.
A higher-than-expected core PCE figure could weaken the case for interest-rate cuts, leading to higher bond yields. At press time, Fed funds futures show investors expecting just 35 basis points of rate cuts this year.
Cryptopolitan reporting by Jai Hamid
