Ahead of the year-end expiry of $28.5bn of contracts on Deribit, traders’ optimism is ebbing. A large block of call options worth $21.7bn is at risk of expiring worthless.
Investors had bet that bitcoin would hold above $100,000, but November’s price action failed to deliver. According to the venue, only 6% of open interest has a strike at $92,000 or below — the rest sits far from the spot price.
There is also a heavy concentration between $100,000 and $125,000.
The “max pain” level stands at $95,000 — the point at which holders would suffer the greatest losses.
A glimmer of hope
Bullish sentiment is underpinned by expectations of further easing of macroeconomic policy in the US. Over the past week traders added call open interest with $90,000–120,000 strikes expiring at year-end.
Bearish positions are vulnerable too. A large share of put strikes is clustered between $75,000 and $86,000. If bitcoin holds above $88,000 into expiry, more than half of these contracts worth $7.7bn would expire worthless.
While the price remains below $94,000, sellers retain the upper hand. At the time of writing the asset trades around $87,800.
Ethereum
On 26 December, options on the second-largest cryptocurrency worth $3.7bn will also expire. Bullish bets outnumber bearish ones two to one.
Most call options risk becoming worthless — traders had positioned for an Ethereum rally to $3,500–5,000 by year-end.
Fewer than 15% of such bullish wagers sit at a more realistic $3,000 or below — which is also the “max pain” level.
Bears, meanwhile, are looking for a drop into the $2,000–2,500 area, where most puts are concentrated.
Here, too, the balance of power favours sellers while Ethereum stays below $3,200. At the time of writing the coin trades around $2,900.
Earlier, Wintermute analysts noted the concentration of capital in bitcoin and Ethereum.