The March 27 BTC quarterly options expiry has caused new uncertainty because billions of contracts were settled.
Traders are now moving positions as they keep a look at short-term price direction. The event comes at an unstable stage of the market characterized by poor sentiment and sluggish price fluctuation.
Large expiry event drives market caution
BTC quarterly options expiry consisted of 194,400 contracts on a notional value of 13.4B. This was one of the biggest quarterly experiences in recent months. The highest level of pain was close to 74,000, which is still higher than the current prices.
Bitcoin was in the range of 68,683 in the expiry window. The scale of expiring contracts was not accompanied by a high price activity. Analysts anticipate that repositioning will be evident on the weekend as traders rebalance their portfolios.
Open interest on Deribit was at record levels before expiry. It increased to $526B as against 494B in the last quarter. This increase is a good indicator of good involvement despite the market direction being down.
Trading of options has become increasingly important in times of uncertainty. Derivatives are more extensively employed by traders to hedge risks and management exposure. This change of strategy is strengthened by the present expiry.
Bearish sentiment shapes BTC options positioning
According to the data on BTC options, there is an apparent concentration on downside protection. The accumulation of put options garnered around the area of $60,000. This signifies that the prices may fall further in the near future.
BTC options had the highest put options open interest at $60,000, signalling an attempt at downside protection. | Source: Deribit.
Meanwhile, call options are still prevalent on the higher levels. There is a positive interest at around $75,000, and this is an indication that there will be a recovery phase. The difference between the existing price and these values is still vast, however.
The market sentiment is not optimistic. This quarter, Bitcoin has fallen 21.6%. January and February losses brought down the performance. Only slight improvements of approximately 2.16 were made in March.
Before expiry, traders rolled forward and closed positions. A lot of their positions moved towards out-of-the-money June and September calls. This is a prudent hope of a recovering situation in the long term.
ETH options reflect a weaker but bearish shift
ETH options-expiry was of $2.12B in Notional Value. The activity was not as high as Bitcoin, but high nonetheless. The highest levels of pain were between 2250 and 2300 following post-late adjustments.
Ether traded around 2,062 towards the expiry. The asset did not experience an uphill trend in the context of a wider market downturn. The put-to-call ratio increased and became 1.10, indicating a temporary bearish tilt.
The downside coverage was seen at around 1,750 in the form of the put options. In the meantime, call options were used in the range of $2,500. This indicates that the level is a possible target of recovery by traders.
Ether will end the quarter 30.55% in the red. The asset experienced two months of consecutive decreases with a slight recovery in March. There is cautious trading activity with weakened sentiment.
The expiry incident signifies an increasing dependency on derivatives in the crypto markets. Traders keep hedging risks and are looking at more apparent signals. Depending on the rebuilding of positions following this significant settlement, market direction may be relied upon.
