Bitcoin Options Expiry Looms: $16B Stress Test for Crypto Rally
The crypto derivatives market is bracing for one of its largest quarterly settlements this year, as nearly $16 billion in Bitcoin options and $2.1 billion in Ethereum options are set to expire on September 25.
This event has been dubbed a 'stress test' for Bitcoin's price by some analysts, as it will reveal whether the current rally is structurally sound or merely driven by dealer hedging flows that evaporate once the contracts clear.
The put/call open interest ratio on the expiring contracts ranges from 0.69 to 0.76, indicating that traders have built up significantly more upside bets than downside protection.
About one-third of the total Bitcoin expiry book carries intrinsic value, almost entirely from the call side, suggesting that traders who bought downside protection are sitting on expired or soon-to-expire hedges that have not paid off.