This Friday, the cryptocurrency market will witness the expiration of Bitcoin (BTC) options worth billions of dollars on Deribit, one of the leading digital asset exchanges. The impending settlement is significant, with more than 139,000 BTC option contracts, valued at approximately $12.13 billion, set to expire. This quantity represents nearly 45% of the total active BTC contracts across all expiration dates, as per Deribit metrics.
The current scenario sees over 65% of the total open interest concentrated in call options. These options provide buyers with asymmetric bullish exposure, while the remaining interest lies in put options, which are designed to offer downside protection.
Typically, quarterly expiries of this magnitude are known to result in increased market volatility. However, current indicators suggest that significant price fluctuations may not occur during this expiration cycle. The Bitcoin 30-day implied volatility index (DVOL) has notably decreased from an annualized 62% to 48% in recent weeks, indicating a notable drop in expected volatility.
Moreover, the annualized perpetual futures basis stands around 5%, further highlighting a calmer funding environment in the market leading up to this expiry.
According to Luuk Strijers, CEO of Deribit, “Despite the size of the expiry, the overall setup—low DVOL, moderate basis, and balanced options positioning—points to a relatively subdued expiry unless external catalysts emerge.” This perspective suggests that, barring any sudden market developments, traders should prepare for a potentially stable market environment.
Market Insights: Some Downside Hedging Observed
Options skew, which quantifies the difference between the implied volatility of calls and puts, indicates some downside concerns in the lead-up to this expiration. While the immediate 3-Day Put-Call Skew is slightly positive—suggesting a demand for downside protection—the 30-Day Put-Call Skew reflects a more bullish outlook in the medium term.
In addition to BTC options, ether (ETH) options worth $2.8 billion are also set to expire on Friday, contributing to the overall dynamics of the cryptocurrency market.
In conclusion, while the expiring options represent a substantial amount of value, the current indicators suggest a lower likelihood of volatility compared to past expiries. Market participants will be closely monitoring other external factors that could influence trading behavior and market stability.
