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Nearly $450 000 Ethereum Options Expiring: Is The Price Fluctuation Inevitable?

The next trading week will be “hot” as the Ethereum options expire tomorrow, September 25th. Should we expect increased asset volatility?

460,000 ETH options expiring

Crypto enthusiasts are holding their breath ahead of tomorrow’s event, with both Bitcoin options and Ethereum open contracts expiring on September 25th. The first alarm bells in the form of increased volatility have been experienced by the crypto market since the beginning of the current trading week. What will happen next with the price?

On the derivatives exchanges, a total of about 460,000 ETH options totaling almost $450 million expire. The record volume of open contracts falls on Deribit: about 414 thousand contracts for Ethereum are opened on the exchange, which is about 90% of the total. Next are Bitcoin options: according to Deribit, about 67 000 BTC contracts are open on their site, which is about 77% of the total open interest in the asset.

The expiration of a record volume of options may trigger an extremely high increase in volatility in the cryptocurrency market. Analysts expect that the peak of price fluctuations will occur in the next trading week and associate this with trading activity on the exchanges. Traders will try to hedge their contractual exposure by selling, buying, or dumping options.

It should be noted that the ratio between open call and put contracts is not equal. Most traders have placed a bet on the put position, which involves selling the asset at a reduced price. Back in early September, this model of traders’ behavior was seen as one of the signs of the prevalence of bearish sentiment on cryptocurrency exchanges.

Will there be a sharp escalation in volatility?

Most cryptо analysts agree that a surge in Ethereum’s volatility after tomorrow’s options expire is inevitable. Firstly, this is due to the record high volume of options contracts and the prevalence of put positions on exchanges. Traders may fold options or activate in the spot market.

Secondly, volatility can get a strong impetus due to the current correlation of Ethereum with the stock market, which started this trading week with a negative and a collapse in stock prices. Thus, the crypto market is preparing for a new phase of price fluctuations, which may affect not only Ethereum but also Bitcoin.