The cryptocurrency options market is at a critical juncture with the impending expiration of a large number of Bitcoin (BTC) and Ethereum (ETH) options. A total of 21,000 BTC options and 350,000 ETH options are set to expire soon, signaling a significant shift in market dynamics and trader sentiment.
As of May 24, the BTC options nearing expiration have a combined notional value of around $1.4 billion, with a Put Call Ratio of 0.88, indicating a slightly bullish sentiment among traders. The Maxpain point, where the most options would expire worthless, is at $67,000, a crucial level that may impact market behavior leading up to expiration.
On the other hand, ETH options present a more bullish sentiment with a lower Put Call Ratio of 0.58 and a total notional value close to $1.3 billion. The Maxpain point for ETH options is $3,200. Recent developments, particularly surrounding Ethereum-traded funds (ETFs), have propelled Ethereum to outperform Bitcoin, resulting in a 20% price increase in just one day. Short-term options for ETH have seen a surge in implied volatility (IV) to 150%.
The divergence between Bitcoin and Ethereum is increasingly evident in block trading and market trading structures. While Ethereum maintains a solid bullish sentiment, sustaining high IV levels across significant terms poses a challenge. Market analysts recommend exploring calendar spreads for better opportunities in the current market conditions. In contrast, Bitcoin sentiment is more balanced, with noticeable pressure from call selling, indicating a mixed outlook among traders.