Bitcoin (BTC) and Ethereum (ETH) options contracts worth $17 billion U.S. are set to expire on Oct. 31, an event that could lead to greater volatility in cryptocurrency markets.
There are currently 127,661 Bitcoin option contracts (calls and puts combined) due to expire at the end of the month, worth $14.4 billion U.S.
Another $2.6 billion U.S. worth of options contracts related to Ethereum are due to expire in coming days.
Options contracts are essentially bets that the price of an asset will either rise (a call option) or decline (a put option) over a set period of time.
With the options contracts set to expire, it is likely to lead to increased buying and selling of Bitcoin and Ethereum as traders and investors look to cover their positions and book profits.
This has led analysts and market observers to warn of heightened volatility in coming days.
An expected interest rate cut from the U.S. Federal Reserve and a slew of financial results from major technology companies could also lead to greater market volatility.
The situation with cryptocurrencies is likely to be more volatile than usual as Bitcoin is currently trading near $113,000 U.S., which is close to the so called “max pain level” of $114,000 U.S.
The max pain level represents the price at which the greatest number of options contracts — both calls and puts — expire worthless.
The max pain level typically leads to the greatest financial losses for traders and investors who hold options contracts on Bitcoin and Ethereum.
Ethereum is currently trading right around $4,000 U.S., also near its max pain threshold.
