Over $4.8 billion in cryptocurrency Options expire tomorrow: market Fluctuation intensifies, Bitcoin and Ethereum show divergent trends.

On August 22 at 16:00 (Singapore Time), options contracts for Crypto Assets worth over $4.8 billion will expire, with the notional value of Bitcoin options reaching $3.83 billion and Ethereum at $948 million. This massive options expiration event could trigger significant short-term market Fluctuation, and investors should be wary of price volatility risks.

Options expiration is often seen as a "ticking time bomb" in the crypto market. Before the contract expiration, traders may amplify price fluctuations through hedging or closing positions, causing asset prices to converge towards the "Max Pain Point." This point refers to the price level at which most contract holders incur the largest losses at expiration. According to data, Bitcoin's Max Pain Point is at $118,000, while Ethereum's is at $4,250. This means that if the prices fail to effectively break through these levels, some options contracts will become worthless, further intensifying market selling pressure or buying surges.

Bear market sentiment dominates, with the Bitcoin Put/Call ratio reaching 1.31.

The Bitcoin options contracts account for the vast majority of the total amount due this time, with a notional value of $3.83 billion and a Put/Call ratio of 1.31. This ratio being above 1 indicates that the number of put options is significantly greater than that of call options, reflecting a cautious or even pessimistic attitude among market participants regarding Bitcoin's short-term trend. The Put/Call ratio is a key indicator for assessing market sentiment; when it exceeds 1, it typically suggests that investors are more inclined to hedge downside risk by purchasing put options rather than betting on an increase.

Currently, the price of Bitcoin has retraced about 8% from last week's high of $124,500, now reported at around $113,500. This pullback is closely related to macro factors, including inflation concerns highlighted in the Federal Reserve's July meeting minutes, as well as a slowdown in consumer spending. Analysts suggest that Bitcoin's support level may be around $112,000, and if this level is breached, the price may further test the $110,000 mark.

The influence mechanism of options expiration lies in "Gamma hedging." Market makers need to hedge risks through the spot or futures market when selling options. As the price approaches the expiration date, this hedging behavior amplifies fluctuations. For example, if the Bitcoin price approaches the maximum pain point of $118,000, put option holders may take profits, while call options face the risk of expiration. This could lead to an increase in selling pressure in the short term, pushing the price downwards. Historical data shows that options expiration of similar scale often triggers intraday fluctuations of 5%-10%. In a similar event in 2024, Bitcoin's volatility soared to over 40% around the expiration, with the final price falling nearly 7%.

In addition, the recent outflow of funds from Bitcoin spot ETFs has intensified bearish pressure. On August 20, there was a net outflow of $316 million from Bitcoin ETFs, with IBIT accounting for $220 million of that outflow. Cumulatively, the holdings of Bitcoin ETFs have dropped to 199,000 coins, indicating that institutional investors are taking profits at high levels or shifting to defensive strategies. Nevertheless, some institutions are still accumulating, such as the Hong Kong company Ming Shing Group, which will acquire 4,250 Bitcoins through an agreement (the transaction amount is approximately $483 million) as a strategic reserve after stablecoin regulation. This suggests that the medium to long-term bullish sentiment has not completely faded, but the expiration of options in the short term may amplify selling.

Bull market signals emerge, with the Ethereum Put/Call ratio at only 0.82

Compared to Bitcoin, Ethereum options present a starkly different picture. In contracts with a notional value of $948 million, the Put/Call ratio is only 0.82, below 1, indicating that call options dominate the market, and investors are more inclined to bet on price increases. This aligns with Ethereum's recent performance: despite a price pullback last week, it has rebounded by 3% this week to $4,299. The maximum pain point is at $4,250, and the current price is slightly above this level. If it maintains strength before expiration, it could lead to more put options expiring worthless, releasing buying momentum.

The optimistic sentiment surrounding Ethereum stems from its strong fundamental ecosystem. Network fees surged by 38% week-on-week to $11.2 million, far surpassing competitors like Solana and BNB Chain. This reflects a resurgence in DeFi and NFT activities, with the total locked value (TVL) accounting for 60% of the entire chain, nearing $100 billion. The Ethereum spot ETF has also attracted a net inflow of $11.801 billion.

The interest in Ethereum futures surged from $2.8 billion in April (when ETH price was below $1,500) to over $10 billion, with an annual trading volume exceeding $4 trillion, breaking the record for 2024 and further confirming the potential of a bull market. Although the price recently tested the support level of $4,070 (a drop of 15.1%, erasing $817 million in leveraged long positions), the futures premium remained at a neutral level of over 5%, and the options skew was only 4%, showing no signs of panic. Exchange ETH withdrawals reached $888 million, indicating a long-term accumulation trend.

Historical experience shows that when the Put/Call ratio is below 1, prices tend to adjust upwards after expiration. In a similar event in 2023, Ethereum rose by 12% a week after the expiration date, and the options expiration could drive Ethereum to rebound to $4,700. However, caution is needed regarding macro risks, such as expectations of interest rate hikes by the Federal Reserve or upward adjustments in the Bank of Japan's target interest rate, which could trigger a broad decline in risk assets.

Fluctuation amplification, be aware of multiple risks

The $4.8 billion options expiration size is not a historical peak, but it occurs during a sensitive period for the market: Bitcoin's market value has fallen, and assets like Cardano and XRP have been severely impacted. The total market value of the crypto market has declined, with Bitcoin ETFs experiencing net outflows for four consecutive days. Tether (USDT) issued $406 million while redeeming $381 million, indicating a delicate balance of liquidity. Investor strategy recommendations: avoid leveraged trading in the short term and pay attention to key levels of $114,000 (BTC) and $4,300 (ETH). In the long term, the strong Ethereum ecosystem may drive the ETH/BTC ratio to a new high in 2025. Positive news such as the Brazilian national BTC reserve hearing and SoFi bank's Lightning integration also inject confidence into the market.

This article is for informational sharing only and does not constitute any investment advice to anyone.

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