More than $3.33 billion in Bitcoin and Ethereum options expire today amid lower-than-expected U.S. CPI and PPI inflation data.
Bitcoin options show a bearish Put/Call ratio of 1.02 with a maximum pain point near $100,000; the Ethereum ratio is 1.36 with a maximum pain of $2,300.
Lower inflation data may pressure the Fed towards rate cuts, increasing demand for cryptocurrencies but raising short-term volatility around the option expiry.
How will the options expiring today impact the prices of these digital assets and the overall volatility of the crypto market?This batch of options includes 26,543 contracts, an increase from the previous week's open interest of 25,925. The Put/Call ratio is 1.02, indicating that traders are buying more Puts (selling rights) than Calls (buying rights), reflecting a bearish market sentiment.
For Ethereum, $569.42 million in options are expiring, involving 219,986 contracts, a notable increase from last week's 164,591 contracts.The maximum pain point is $2,300, with a Put/Call ratio of 1.36, suggesting a bearish market outlook for ETH.
The 'maximum pain point' in crypto options is crucial. It represents the price level at which theholders of options experience the greatest financial discomfort.Bitcoin is trading at $103,912, while Ethereum is priced at $2,572. This means both digital assets are above the strike prices with a predominantly bearish market sentiment. It is notable that markets tend to gravitate toward the strike price or maximum pain level after expiry to minimize payouts.
Analysts also note caution in the market, with defensive strategies emerging, and thetraders preferring to sell rather than chase momentum.Meanwhile, these expiring options come after U.S. CPI data for April showed inflation cooled to 2.3%, the lowest reading since February 2021. Similarly, April PPI inflation fell to 2.4%, below expectations of 2.5%.
According to analysts, although the April data changed the narrative, markets may be underestimating this shift.
Lower inflation and fading retail trade could pressure the Fed to cut rates sooner, despite previous signals from the Fed to maintain stable rates amid tariff uncertainties and a 2% inflation target.
Thistypically drives risk assets like Bitcoin and Ethereum, increasing demand for crypto options as investors seek leveraged exposure. Lower inflation eases the pressure on monetary tightening, improving market liquidity, which raises Call option premiums.
