The next 24 hours are set to become the first crucial test of crypto’s October setup.
Deribit Options data suggests that the market has a critical expiry event ahead. Over $18 billion worth of Bitcoin and Ethereum Options are set to expire on the 25th of September, representing the largest expiry by value of the year.
Notably, larger Options expiries tend to see increased volatility as traders close or roll positions and rebalance their Options portfolios, making crucial Options metrics vital to watch out for.
Interestingly enough, the Options data suggests a bullish bias. As can be seen on the chart below, Bitcoin alone has more than $14 billion in Options set to expire, with around $76k in put Open Interest versus $100k in call Open Interest.
This gives the Put/Call Ratio of 0.76, which implies that calls are outweighing puts and traders are more weighted towards the upside.
Meanwhile, Ethereum has $2 billion+ in Options up for expiry, with a ratio of 474k:303k, or 1.56, for calls to puts. The Put/Call Ratio for Ethereum is 0.64, which is even more skewed towards calls ahead of the expiry.
Combined, Bitcoin and Ethereum have nearly $18 billion in Options expiring on Ethereum, with a bullish skew.
From a technical perspective, Bitcoin’s max pain price is at around $78k, while Ethereum’s is near $2.3k. However, it is essential to consider the timing, as the last 24 hours were extremely volatile for the market.
Moreover, geopolitical tensions caused the sell-off of over $1 trillion in the US market, which spilled over into the crypto space and created a bearish environment despite the long positioning in derivatives.
In this regard, the upcoming $18 billion Options expiry could become a key volatility trigger.
$18B Options expiry puts crypto’s next move in focus
Generally speaking, the max pain level is a price magnet around the Options expiry.
With Bitcoin and Ethereum trading well above their respective max pain levels, the risk of pullback could increase as expiry approaches, but the strong Spot demand and bullish positioning could help absorb the selling pressure.
Notably, this is where the divergence between Spot and derivatives begins to matter.
According to CoinGlass data, more than $400 million in long positions were liquidated on the 23rd of September, marking the strongest weekly long squeeze. However, Bitcoin Spot ETFs still saw more than $350 million in inflows, helping to offset some selling pressure caused by the squeeze.
As a result, Bitcoin [BTC] saw only a 2% drop to stay around $85k, strongly withstanding the heavy liquidation.
Naturally, this puts the bulls in a good position ahead of the Options expiry.
Strong Spot buying is absorbing a considerable amount of supply, and BTC is still holding firmly around the $85k level. Bitcoin’s max pain level is around $78k, meaning that BTC is well above that zone.
Moreover, if Bitcoin continues to hold that gap despite the expiry-driven volatility, the current bullish setup will stay valid.
In general, the $18 billion Options expiry adds a huge volatility catalyst to the market and can be a significant factor for crypto’s October setup.
Final Summary
- $18 billion in BTC and ETH Options are expiring, which could bring more market volatility.
- BTC is holding near $85k despite heavy liquidations, keeping the October setup bullish.