Understanding the Impact of Expiring Options Contracts on BTC and ETH Prices

02/23/2023 03:35 • Daily Digest • 140 views

On February 23, according to Deribit data, option contracts with more than 1.85 billion US dollars BTC and 870 million US dollars ETH will expire for delivery on February 24. The maximum pain point price of BTC is $22000; The maximum pain point price of ETH is $1600.

Data: US $1.85 billion BTC and US $870 million ETH option contracts will expire and be delivered on February 24

Interpretation of the news:

The cryptocurrency market continues to be a hotbed of activity with a lot of attention being paid to the expiry of options contracts on February 24th. According to data from Deribit, more than 1.85 billion US dollars BTC and 870 million US dollars ETH option contracts will expire for delivery on the same day.

This event has the potential to create havoc in the market with traders and investors trying to make sense of the impact. The maximum pain point price of BTC is $22000, while the maximum pain point price of ETH is $1600. So, what does it mean for the market?

Firstly, options contracts give buyers the right, but not obligation, to purchase or sell an underlying asset, in this case, Bitcoin and Ethereum at a set price at a future date. It’s an agreement between the buyer and the seller, where the seller is paid a premium for taking on this risk. This means that options contracts can have a big impact on the price of BTC and ETH, especially if a large number of contracts are set to expire on the same day.

Secondly, the maximum pain point price is the price at which the maximum number of options buyers would suffer losses, effectively maximizing the pain for the most number of traders. This metric is based on the open interest of contracts and the strike price of these contracts. It provides an indication of the price that traders and investors will try to keep BTC and ETH below, in order to minimize their losses.

So, what can we expect on February 24th? There are a few scenarios that could play out. If the price of BTC and ETH is below the maximum pain point, it’s likely that buyers will exercise their options contracts, which could lead to a sell-off in the market. Conversely, if the price is above the maximum pain point, it’s more likely that sellers will exercise their contracts, which could lead to a short squeeze in the market.

In conclusion, the expiry of these options contracts on February 24th has the potential to create significant volatility in the market. Whether the price of BTC and ETH goes up or down is uncertain, but traders and investors will be watching closely to see how the market reacts. It’s worth noting that the maximum pain point is just a guide, and ultimately the market will determine the price of these cryptocurrencies.

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