Tomorrow, $12 billion worth of Bitcoin options contracts are set to expire, marking one of the largest three-month maturities in the history of derivatives exchange Deribit.
Despite the magnitude of this event, Deribit CEO Luuk Strijers predicts volatility will remain low.
On Deribit alone, expiring contracts account for 45% of the platform’s open options. There is currently $27 billion of open interest in Bitcoin contracts on the exchange, with a put/call ratio of 0.52, suggesting a slight pessimism among traders.
In options trading, call options give buyers the right to buy an asset at a predetermined price before expiration and typically signal bullish sentiment. Conversely, put options allow investors to sell at a specified price before expiration and are often used as a hedge against price declines.
Analysts at Singapore-based crypto trading desk QCP Capital have set $85,000 as the maximum loss point for this expiration.
Deribit’s Implied Volatility Index (DVOL), a key measure of expected price fluctuations over the next 30 days, currently stands at 47. Strijers noted that this level is relatively low and comparable to what was seen in February and August 2024. This suggests limited expectations for large price swings.
DVOL functions as the cryptocurrency equivalent of the Cboe Volatility Index (VIX), which measures expected volatility in the stock market based on S&P 500 index options.
Even after US President Donald Trump announced that he would impose a 25% tariff on vehicle imports, DVOL fell to 46, reinforcing the view that market movements were limited.
Macroeconomic uncertainty persists despite relatively calm options markets. “Uncertainty around U.S. tariffs remains high and lack of clarity is causing anxiety in the equity market,” Strijers said, adding that the U.S. dollar and gold prices remain elevated.
Additionally, the potential impact of Mt. Gox’s Bitcoin movements remains a topic of debate. The dormant exchange transferred “large amounts” of Bitcoin this month, some of which was redirected to Kraken. While Glassnode analysts report that there is no significant on-chain evidence to suggest that creditors will be repaid anytime soon, the possibility remains.
*This is not investment advice.
