Market Volatility Expected as Bitcoin and Ether Prices Decline

Bitcoin and Ether have experienced declines today as investors brace for the upcoming expiry of over $22 billion in Bitcoin options on Friday. This event is anticipated to increase market volatility, creating a tense environment for traders and investors alike.

The expiry comes against a backdrop of broader macroeconomic uncertainty. Investors are closely watching U.S. economic data, including gross domestic product figures, weekly jobless claims, and Treasury auctions, which could influence market sentiment in the coming days.

Options Expiry and Market Sentiment

According to data from laevitas.ch, at least $22.6 billion in Bitcoin options will expire tomorrow. Deribit holds the largest share of open interest with $17.07 billion, while OKX and CME each have around $1.9 billion in Bitcoin options set to mature. For Ether, at least $5.12 billion in option contracts are scheduled to expire on Friday.

Call options currently outnumber put options, with $12.6 billion in call exposure indicating a neutral to bullish outlook as long as Bitcoin remains above $112,000. Approximately 81% of Deribit’s put contracts are set at $110,000 or lower, leaving about $1.4 billion active at current levels. Meanwhile, roughly $6.6 billion in call options are set to mature at $120,000 and above, though only $3.3 billion has the potential to mature at current BTC price levels.

Open Interest and Settlement Ranges

Monitoring the open interest for Deribit at current price ranges highlights several settlement scenarios. If BTC closes between $107,000 and $110,000, put options will dominate with $2 billion in puts versus $1 billion in calls, resulting in a $1 billion advantage for bearish bets. If BTC closes between $110,000 and $112,000, calls and puts would be matched at $1.4 billion each. However, if BTC closes between $112,100 and $115,000, bulls would gain a $600 million advantage for calls.

The 30-day options delta skew for Deribit stands at 13%, indicating that puts are trading at a premium compared to calls. This suggests caution for investors despite the overall bullish setup.

Ether Faces Technical Pressures

Ether has seen a decline this week due to cooling institutional demand and short-term technical pressures. Rachael Lucas, a cryptocurrency analyst at BTC Markets, noted that technical analysis points to near-term weakness, warning that more liquidations may occur if the price drops below $3,800.

Tony Sycamore, an analyst at IG Australia, added that if ETH closes below $4,000, the token could test the $3,700 and $3,500 levels. Fund outflows from Ether ETFs have further pressured the market, with nearly $300 million withdrawn this week. On Monday, at least $1.7 billion in bullish positions were wiped out following the downturn.

Current Price Movements

As of the time of publication, Bitcoin has dropped by 1.3% and is trading at $111,578.31. The token has recorded $53.48 billion in 24-hour volume and a market cap of $2.22 trillion. Ethereum, on the other hand, has fallen by over 4.11% and is currently trading at $4,004.11. ETH has also recorded $46.55 billion in 24-hour volume and a market cap of $483.52 billion.

The wider crypto market cap has declined from a high of $3.92 trillion this week to $3.82 trillion today, losing over $100 billion in value.

Outlook for the Week Ahead

If Bitcoin maintains its price above $112,000, Bitcoin call option holders may benefit; however, lower price levels could favor bearish strategies. Investors anticipate increased market volatility throughout Friday and into the weekend.

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