Nearly $4.3 billion in Bitcoin (BTC) and Ethereum (ETH) options contracts are expiring today, potentially impacting short-term market dynamics. This expiry, though smaller than last week’s, aligns with growing market optimism surrounding an expected Federal Reserve interest rate cut next week.
Bitcoin Options: Cautious Sentiment Prevails
According to Deribit, Bitcoin options expiring today have a notional value of $3.42 billion, with a total open interest of 29,651 contracts down slightly from 30,447 last week.
The breakdown shows 12,819 call contracts and 16,833 put contracts, resulting in a put-to-call ratio of 1.31. This tilt toward puts suggests traders are hedging against potential near-term price declines.
Bitcoin is currently trading at $114,972, above its max pain level of $113,000. The max pain theory suggests prices often gravitate toward this level near expiration.
Ethereum Options Balanced Positioning
Ethereum’s options market shows a less bearish outlook. With 93,518 call contracts and 96,182 put contracts, the put-to-call ratio is 1.03, reflecting more balanced trader sentiment.
The 189,700 contracts, valued at $858.2 million, represent a significant drop from last week’s 299,744 contracts.
ETH is trading at $4,553, above its max pain level of $4,400.
Market Dynamics and Fed Expectations
The options market is showing low implied volatility, with analysts at Greeks.live noting that a 25-basis-point Fed rate cut is likely priced in.
Block trades have surged, making up over half of daily trading volume in the past two weeks, with activity concentrated in the current month. Buying and selling are nearly equal, indicating mixed market views for the rest of September.
Despite this, sentiment for Q4 remains broadly bullish, with expectations of a potential rally if the Fed confirms the anticipated rate cut.
The calm volatility and balanced trading activity suggest the market is poised for stability, though traders remain watchful of the Fed’s next move.
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