In recent days, due to the holiday season, trading volumes on the cryptocurrency market have decreased, and the market is experiencing increased volatility. The situation is expected to worsen with $17.8 billion worth of Bitcoin (BTC) and Ethereum (ETH) options contracts expiring tomorrow.
The situation was highlighted by famous crypto influencer Ashcrypto (@Ashcryptoreal) on X. According to the tweet, this event could also lead to sharp price fluctuations that could create opportunities or risks for traders.
What does this mean for the market?
Options contracts are instruments that allow traders to buy or sell assets at a predetermined price before a specific date. When these contracts expire, traders adjust their positions, resulting in increased volatility. Since both BTC and ETH make up the bulk of the crypto market, the expiration of this huge volume will have a significant impact on other cryptocurrencies as well. Because of this post on X, the community is currently in a FUD situation.
Potential Scenarios
The market’s reaction will largely depend on whether most options at expiration are bullish (call) or bearish (put). Traders are rushing to buy assets, and a put-option dominated scenario could put downward pressure on prices. Whatever the outcome, it will set the tone for the market heading into the new year.
How can traders prepare for Bitcoin and Ethereum options expiration?
For short-term traders, identifying key support and resistance levels will be critical. On-chain data and large wallet movements will need to be monitored, which will provide clues about the direction of the market.
Long-term investors can use this opportunity to evaluate their portfolio and consider dollar-cost averaging strategies if prices drop significantly.
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