Watch Out for Tomorrow: A Massive Expiration Day Shock Looms in Bitcoin Options—Chinese Analysis Firm Weighs In

In the cryptocurrency derivatives markets, attention is focused on the critical day when first-quarter option contracts of the year will expire.

According to the latest data shared by the cryptocurrency analysis platform GreeksLive, the overall market trend remains negative ahead of tomorrow’s quarterly settlement process.

According to the platform’s assessment, this settlement period marks the largest option closing in the first quarter of the year. The fact that approximately 40% of total open positions are about to expire increases the risk of short-term market volatility. Specifically for Bitcoin, the maximum “pain point” level is estimated to be around $75,000, but given current market conditions, reaching this level is considered unlikely.

Related News: The Altcoins with the Highest and Lowest Long Position Ratios Have Been Revealed

The positioning data in the options market is also giving noteworthy signals. While the put/call ratio remaining at 0.6 indicates relatively low demand for put options, the overall market sentiment is still bearish. This suggests that investors are limiting their risk appetite rather than taking hedging positions.

On the other hand, a significant warning emerges regarding volatility. It is stated that implied volatility (IV) remains strong prior to settlement, but a sharp “IV Crush,” or volatility drop, is highly probable as the market approaches its expiration date. In this scenario, short-term option buyers could be at a disadvantage, while option sellers could gain an advantage.

Institutional investor behavior also supports this expectation. According to Deribit data, investors described as “smart money” are aggressively moving their positions to later dates in large-scale transactions. In particular, it is reported that contracts expiring tomorrow are being closed, and there is a significant increase in the demand for out-of-the-money call options with June to September expiry dates and strike prices above current levels.

*This is not investment advice.

Continue Reading: Watch Out for Tomorrow: A Massive Expiration Day Shock Looms in Bitcoin Options—Chinese Analysis Firm Weighs In