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Bitcoin's Quiet Options Expiry Shows It's Not the Only Game in Cryptotown

CryptocurrencyApr 30, 2021 04:43PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com –Bitcoin racked up gains Friday, plotting course for another ride above $60,000, but the unexpectedly calm expiry of $3.5 billion worth of BTC options suggests BTC is not the only game in cryptotown.

BTC/USD rose 7.7% to $56,962, though remains near its record high of $64,778.

In the run up toward the April 30 options expiry, investor attention was fixated on the option sellers.

The path toward victory for the sellers is to move the price of bitcoin to a level that results in the maximum pain, or biggest losses for option holders at expiration: the "maximum pain price."

The maximum pain point for option traders for the April 30 expiry was $54,000, according to data from Deribit Insights, the main exchange for crypto options. But in the days leading up to the expiry, BTC jumped from about $48,000 to over $54,000 to trade within the maximum pain point.

"The combined 54,000 call/put strikes represent an intrinsic value of only $49,000,000, meaning that the majority of long calls and puts for the April monthly contracts are expiring worthless," said Nathan Cox, chief investment officer of Two Prime, a digital assets investment firm specialized in bitcoin and ethereum.

In recent history, as option expiration draws closer, wild swings in the price of bitcoin follow as the option sellers and buyers battle it out. But this time was different, both sides were muted.

"Bitcoin’s expiration at max pain point in April has many option traders scratching their heads. For the first time in months, long vol bets (upside calls) didn’t pay off as expected, and downside volatility remained muted," Cox said.

The lack of action shows that bitcoin is not the only game in the cryptotown as its younger sibling Ethereum hogged the limelight.

"If you’re wondering where it went, look no further than bitcoin’s younger sibling Ethereum, where monthly returns soared nearly 40% and long volatility bets paid off exponentially. It’s not uncommon to see the two largest digital assets ‘take turns’ or experience rotation as traders and arbitrageurs try to anticipate divergence and capture alpha."

The fundamental data echo's this point as bitcoin’s dominance rate - the ratio of BTC market cap over total market cap – fell below 48% for the first time since July 2018.

ETH/USD rose 1.34% to $2,763.93, and has racked up 17% of gains over the past seven days.

Bitcoin's Quiet Options Expiry Shows It's Not the Only Game in Cryptotown
 

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Comments (7)
TL Chan
TL Chan May 02, 2021 1:07AM ET
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be careful , the ' intrinsic value" in the context of option is not meaning the real intrinsic value. The one used in option only means the market price of the asset. The intrinsic value of Btc is Zero. Btc is just another type of fiat stuff, no lesser evil.
Domenico Pisani
Domenico Pisani May 01, 2021 1:50AM ET
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doge.
CHIN GIAP KHOR
CHIN GIAP KHOR May 01, 2021 12:57AM ET
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Author, your statement of this The combined 54,000 call/put strikes represent an intrinsic value of only $49,000,000, meaning that the majority of long calls and puts for the April monthly contracts are expiring worthless. Meaning BTC will drop to 49K ???
Kevin Loy
Flippinroo2 Apr 30, 2021 5:46PM ET
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Deribit is the site for Bitcoin options.
Shahid Khan
Shahid Khan Apr 30, 2021 5:46PM ET
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Deribit is the site for Bitcoin options.
Jose Soberanes
Jose Soberanes Apr 30, 2021 5:37PM ET
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Cardano!!!👍🏽👍🏽👍🏽👍🏽
David Wickham
David Wickham Apr 30, 2021 5:37PM ET
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maybe
David Wickham
David Wickham Apr 30, 2021 5:37PM ET
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maybe
Stephen Szpunar
Stephen Szpunar Apr 30, 2021 5:37PM ET
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cardano is a waste basket project compared to XTZ Tezos is so much better. can't wait for market cap acceleration to caradanos and a challenge to ETH If 2.0 isn't everything it's supposed to be
Ram Ch
Ram Ch Apr 30, 2021 5:21PM ET
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How do you trade BItcoin options? Do they even have options? I would love to play if they have one
Daz Lo
Daz Lo Apr 30, 2021 5:21PM ET
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Binance has options
Stonks Onligoup
Stonks Onligoup Apr 30, 2021 5:15PM ET
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Next leg of the bull run begins now. Climb aboard before you miss the ride to $100k!
 
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