Nearly $3 Billion in Bitcoin and Ethereum Options Set to Expire, Testing Market Strength

A significant $3 billion worth of Bitcoin and Ethereum options is set to expire on January 16, drawing attention to the derivatives markets as crypto prices test the resilience of a recent rally.

Key Takeaways

Nearly $3 billion in Bitcoin and Ethereum options are expiring, impacting crypto markets.
Bitcoin shows strong price movement but still exhibits cautious options positioning.
Ethereum remains stable, facing challenges in breaking resistance.
Institutional trading highlights Bitcoin’s dominance in the current market.
Market analysts suggest that derivatives are not yet in a bullish phase.

Despite Bitcoin rising significantly above a crucial technical resistance level, the positioning of options and volatility metrics indicate that traders are still hesitant to fully commit and declare this movement a confirmed bull market breakout.

Bitcoin Breakout Under Scrutiny as Options Expiry Approaches

Data from Deribit reveals that the total notional value of options expiring today is approximately $2.84 billion. Bitcoin leads this expiry with nearly $2.4 billion, while Ethereum accounts for about $437 million.

This distribution of options underscores where market focus and risk are concentrated. Currently, Bitcoin is trading around $95,310, well above its max pain level of $92,000. In the context of options, max pain refers to the price point at which the most contracts expire worthless, often serving as a focal point as expiry approaches.

Trading significantly above this level increases the likelihood of added volatility as traders close, roll, or hedge their positions.

Although Bitcoin has broken out, its options positioning remains cautious. Open interest in call contracts stands at 11,170, while put open interest is at 14,050, leading to a put-to-call ratio of 1.26. This imbalance indicates that traders still prefer downside protection over bullish positions, even after BTC has emerged from a nearly two-month consolidation phase.

If Bitcoin manages a daily candlestick close above $94,304, it could serve as a launch point for further gains, potentially targeting the elusive $100,000 mark. Conversely, a failure to hold this support level may result in a retreat back into the multi-month consolidation range.

Ethereum Options Reflect Skepticism as Market Remains Stable

In contrast, Ethereum is currently displaying signs of consolidation rather than a bullish breakout. Trading around $3,295, ETH is only slightly above its $3,200 max pain level.

The options market for Ethereum appears balanced, with 65,527 call contracts and 67,207 put contracts outstanding, yielding a near-neutral put-to-call ratio of 1.03.

This data signifies a market that is protected but uncertain, aligning with Ethereum's challenge to break decisively above the $3,400 resistance area.

Market flow data also reinforces Bitcoin’s dominance in the current uptrend. In a market note dated January 14, analysts at Greeks.live pointed out a stark contrast in block trade activity between the two cryptocurrencies.

“Bitcoin successfully broke through the $95,000 resistance level, emerging from a nearly two-month consolidation phase,” the analysts noted. “While Ethereum had a higher percentage gain, its price action proved less vigorous compared to BTC, remaining stuck within its $3,400 range.”

This divergence became particularly pronounced in larger institutional trades. Greeks.live reported that Bitcoin block trades amounted to $1.7 billion, which represented over 40% of the total daily volume. On the flip side, Ethereum block trades totaled just $130 million, approximately 20% of ETH’s overall volume.

“The market is evidently more concentrated on Bitcoin’s bullish momentum,” analysts observed.

That said, the broader derivatives landscape still appears shaky. Greeks.live indicated that futures volume has not experienced a substantial increase alongside the price uptick, and that the implied volatility for key expirations has not rebounded significantly.

“The derivatives market has yet to transition into a structurally bullish phase,” the analysts cautioned, noting that the current environment appears to be a “reaction to the sudden price surge, with the long-term perspective remaining skeptical of a bull market.”

As the significant options expiry unfolds today, spot prices may gravitate back toward their max pain levels, and investors should prepare for possible volatility. However, volatility typically subsides afterward as traders adapt to the new trading conditions.