Bitcoin, Ethereum, XRP Options Worth $7.5B Expire Today
Global investor sentiment improved after the U.S.-Iran ceasefire was extended by 60 days, allowing for renewed risk-taking across the markets. Bitcoin (BTC), Ethereum (ETH), and XRP rallied as investors bought the dip.
While the markets are recovering, over $7.5B in crypto options contracts are expiring today, leading to high uncertainty in the markets. The lack of clear direction and options expiry frequently leads to escalated market volatility. Additionally, financial markets are heavily influenced by inflation, and recent U.S. PCE inflation data shows inflation leveling at 3.8%, aligning with estimates of global investment banks such as JPMorgan and UBS.
The Focus Remains on Bitcoin
For 84,000 or so BTC options contracts expiring May 29, Bitcoin dominates the trading market at the moment. The put to call ratio among expiring contracts is 0.84, meaning 0.84 of (expiring) contracts are calls and the remaining 0.16 are puts. Additionally, calls in the options market for the BTC active contracts in today’s market outnumber puts in the market by a significant amount.
For Bitcoin options, the max pain price is set at $75,000 while Bitcoin is currently selling at $73,662. In options trading, the level of maximum pain is expected to be the final price of the contract at expiration. This indicates that traders are anticipating a strong rally toward the $74,500 – $75,000 range.
The compression of implied volatility is another indicator of a potential sharp price movement toward the maximum pain target. Implied volatility has remained at a relatively elevated level, considering the recent drastic decline in the Cryptocurrency market. This would indicate that Bitcoin is at or around the local bottom of the market and that the market has not priced in the extreme levels of panic selling.
From a technical analysis standpoint, the price for Bitcoin has just printed a hammer candle on the daily timeframe chart, which is a strong bullish reversal indicator and is typically only printed at the bottom of a market.
Ethereum Faces Mixed Signals Ahead of Expiry
The situation for Ethereum is more complex. With around 643,000 Ethereum options contracts valued at ~$1.29 billion expiring today, the total put/call ratio shows that there is a somewhat bullish outlook of 0.74; however, the short-term outlook has become quite bearish.
Ethereum’s put/call ratio has reached a staggering 3.5 in the past day, signifying a large increase in bearish put buying, which is according to 10x Research. Based on abnormal trading behavior, the $1,800 and $1,900 strike prices are indicating some of the largest volume options buying activity that has occurred in the past 5 days, an increase by a factor of nearly 5x.
Ethereum’s maximum pain price is at $2,200 and is listed at $2,016 for the current market price. According to the Deribit data, it is more likely by 57% that Ethereum will settle above the $2,000 strike price. After expiry, many believe Ethereum will drop even further due to poor network fundamentals and decelerated institutional demand.
10X Research commented that Ethereum is possibly trading at an undervalued price, especially if Ethereum’s price is below $2,000, but that price may not always signal a buying opportunity. Analysts agree that Ethereum’s price will likely follow the rest of the market and be influenced by the fundamentals of the blockchain.
Ethereum’s price has positive signs of early price recovery after recently trading above $2,000. In conjunction with the positive momentum in Bitcoin’s price, Ethereum’s price has recently printed a hammer candle along with a dragonfly doji in its daily chart.
Whale Buying Increases XRP Strength
XRP has been gaining buying pressure before the options expiry today. There are currently over $27 million worth of expiring XRP options, and the put/call ratio is at 0.90. The buying behavior was more bearish leading up to the expiry due to a put/call ratio of 1.4 in the previous 24 hours.
The current max pain price for XRP is $1.40, and $1.31 is the currently trading price. XRP has been gaining buying pressure over the last 24 hours due to heavy accumulation by whales, traders shifting from other assets to XRP, and a significant increase in derivatives trading.
There are traders buying calls for the strike prices for $1.60 for the June expiration and $3.40 for the September expiration. For the last 24 hours, XRP’s price has gone up more than 3%. XRP is currently one of the larger cryptocurrencies in the recovery stage and one of the largest in the market.
Is It Possible for the Crypto Market to Recover, or Will It Continue to Crash?
The crypto market is unsettled when it comes to efforts to contain inflation, the politics of the world, and the huge sell off of options about to happen. Bitcoin is currently the only cryptocurrency with a strong bullish trend and, while Ethereum is also trying to manage recovery, it has not been successful. XRP has been the most bullish of late because of many whale traders gambling and accumulating XRP.
In the liquidations of futures, the longs and the shorts are near a perfect 50/50 split. If Bitcoin holds support over $73,000 and Ethereum over $2,000, it’s possible the crypto market will continue on an upward trend. If we get one or two more inflation reports with worse than expected data, the market will likely fall again.
Conclusion
The crypto markets appear to be mending at last. Bitcoin, Ethereum and XRP are all up, even with the massive $7.5 billion monthly options expiry. Bitcoin is still the strongest of the major cryptocurrencies. It has positive bend bullish patterns supported by a positive put/call ratio, and upside expectations toward the $75,000 level.
Ethereum’s outlook is mixed, as there are more bearish bets and options positions, but the technical charts indicate a possible bullish still up, short and above the $2,000 level. XRP is rising as whale and institutional accumulation push the price to over $1.30.
Overall market sentiment is still mixed following the recent US-Iran ceasefire, but liquidation data is better and less of a concern, volatility is still high and there are still inflation concerns.
The market behavior over the next few trading sessions will be telling as to whether we see a broad recovery in the crypto markets or if we once more experience another sharp and sudden price correction. Traders remain focused on the key support and resistance, showing mixed volatility across the cryptocurrency market.
