Deribit: Bitcoin $5.8 billion quarterly option expiration may trigger market volatility

According to CoinDesk, cryptocurrency exchange Deribit has stated that the Bitcoin market may become busy in the next two days as multi billion dollar option contracts expire on Friday. As of the time of writing this article, 90000 BTC option contracts worth $5.8 billion and ETH options worth $1.9 billion need to be settled. Of the total $5.8 billion in open Bitcoin contracts, about 20% are "in the money" contracts, which have favorable strike prices compared to the current market exchange rate of cryptocurrencies. A similar positioning has also appeared in Ethereum options. For call options, in the money means that the strike price is lower than the current market exchange rate, while for in the money put options, the opposite is true. Both allow holders to exercise their buying and selling rights for profit, laying the foundation for market volatility. Deribit CEO Luuk Strijers stated in an interview that "approximately 20% of BTC options that expire are in the money options. As traders close or extend positions, this larger expiration time may exacerbate market volatility or activity, which may also affect prices." Extending means closing existing trades on the upcoming expiration date and opening new trades on the subsequent expiration date to extend the holding period. In order to make profits, seasoned traders usually choose to extend their profit positions and allow profits to continue to grow. Due to the decision of the US Securities and Exchange Commission (SEC) to release options linked to the BlackRock Bitcoin ETF (IBIT), this may accelerate the adoption of institutional investors, resulting in continued strong market activity in the coming months. Strijers said, "One of the biggest potential drivers is ETF options. The SEC has expressed support, but the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC) have not yet approved them, and it is unlikely to approve them this week The pricing method for options expiring in the coming months indicates a bullish market outlook. Strijers pointed out, "After the September expiration date, the put call skewness of Bitcoin and Ethereum is negative, which is a bullish indicator because call options are more expensive than put options