Amid recent uncertainty, a significant options expiry in the Bitcoin and Ethereum derivatives market offers insight into the outlook of market participants.
Crypto markets have been subdued by uncertainty this week as fears of a looming trade war have left most market speculators on the fence.
Amid the uncertainty, a significant options expiry has offered further insight into the outlook of market participants.
Mixed Bag
Over $3 billion in Bitcoin and Ethereum options have expired on Friday, February 7. Specifically, 26,000 BTC options worth $2.54 billion expired with a put-call ratio of 0.58 and a max pain point of $99,500.
On the other hand, 203,000 ETH options worth $560 million expired with a put-call ratio of 0.46 and a max pain point of $2,950.
Put options give traders a right to sell an asset at an agreed price or before a fixed date, while call options give the holder a right to buy. The ratio of the amount of these two contracts within a given period often offers insight into market sentiment.
The max pain point is the price at which most contracts expire worthless, causing the most financial losses for traders.
Notably, market makers tend to push prices to these levels near options expiries to maximize profit. It can also reflect where they expect options to expire.
While the expiry of Bitcoin and Ethereum options with put-call ratios below 0.7 suggests that most traders are still betting on higher prices, the max pain point, especially compared to last week, presents a more nuanced picture.
Last week, the max pain point for Bitcoin was $98,000. While the increase to $99,500 this week suggests improved optimism, it is mild at best.
Ethereum, meanwhile, had a max pain point of $3,300 last week. As such, the drop to $2,950 this week suggests weaker market sentiment.
Meanwhile, options trading kit provider Greeks.live has warned that put options are growing in volume, suggesting a growth in bearish sentiment.
U.S. Economy in Focus
As highlighted by Greeks.live, traders and investors will likely look to the January 2025 U.S. jobs data slated for release later today to adjust their positions. This includes the unemployment report and non-farm payroll.
An unexpected spike in unemployment and a similar drop in jobs could reignite hopes of faster rate cuts, which could see more capital flow back into risk markets like crypto.
On the other hand, better-than-expected numbers could only reinforce risk aversion sparked by recent trade war fears.
Ahead of these releases, Bitcoin trades just over the $97,100 price point, while Ethereum exchanges hands for about $2,700.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
