Cryptocurrency Options Worth $3.6B to Expire on Friday, 8 am

Cryptocurrency Options Worth $3.6B to Expire on Friday, 8 am

  • There are twice as many ETH traders holding long positions as there are short positions.
  • Strijers said that both markets’ implied volatility (IV) had hit a “rock-bottom” level.

According to Deribit’s DVOL Index, the implied volatility of ETH has dropped to its lowest level ever.

As nearly 26% of open positions on Deribit, the most prominent cryptocurrency options exchange, are scheduled to expire at 8 am UTC on Friday, options traders are keeping a tight watch on their clocks.

The chief business officer of Deribit, Luuk Strijers, said in an interview with The Defiant that about 85,000 open contracts for Bitcoin worth $2.3 billion and 700,000 open contracts for Ether worth $1.3 billion, will expire today.

According to Strijers, there are twice as many ETH traders holding long positions as there are short positions, and the “max pain” level for Ether is now resting at $1,800. This means that if the price of Ether were to close at $1,800, the majority of options would become worthless at expiration.

Approximately two-and-a-half times as many Bitcoin traders hold long positions when compared to those who hold short positions, and the maximum pain point for Bitcoin is now at $27,000.

It would seem that many traders are still at risk of suffering significant losses, with ETH trading at $1,805 and BTC at $26,450 respectively.

What are Options 

Options are a kind of financial derivative that grants traders the ability to buy or sell an asset at a specified price up to a certain expiration date by purchasing the right to do so at that price. Traders only risk the amount of the option premium that they paid, which allows for leveraged bets to be placed with a smaller amount of cash.

Options also increase the possibility for both loss and profit, which means that traders who aren’t attentive might rapidly rack up significant losses if they make poor decisions.

Strijers went on to say that the implied volatility (IV) of both markets has reached a “rock-bottom” level. A major bullish rise in the market occurred not long ago with similar market circumstances.

What is Deribit

Futures, perpetual swaps, and options on Bitcoin, Ethereum, and Solana are all available to trade on Deribit, the industry-leading cryptocurrency derivatives market. Trading in a number of other currencies is also possible with USDC serving as collateral.

The combination of the exchange’s sophisticated trading interface, extensive liquidity, and low latency has contributed to its rise to becoming the most popular venue for trading crypto options on the market. Nevertheless, Deribit is still uncontrolled, despite the fact that multiple regulated crypto derivatives exchanges have emerged in recent years. This might lead to future difficulties in the area of regulatory compliance.

Cons of the platform 

Bitcoin (BTC) is the sole accepted form of account funding for Deribit users.

Because Deribit is not regulated, there is a possibility that it may run into regulatory problems in the near or distant future. 

Deribit does not accept users from the United States since the company does not possess a license to do business in the country.