The cryptomarkt turns red. Bitcoin (BTC) currently records a loss of 1.1 percent in the last 24 hours, but the biggest blows fall with the Altcoins. Ethereum (ETH) drops 5.2 percent and XRP is 2.6 percent in the min. And it can become even more restless: today runs no less than 3.7 billion dollars in bitcoin and ethereum options. What exactly does this mean? And why does the market hold its heart?
Bitcoin and Ethereum under ‘Max Pain level’
According to figures from the Deribit trading platform, this concerns $ 3.1 billion in Bitcoin option contracts. These are financial instruments with which traders are given the right to buy Bitcoin at a later time (call) or to sell (well), at a predetermined price.
The well-to-call ratio is 0.7, which means that there are more call options open than Puts. Many traders therefore speculate on an increase in the BTC rate.
The problem? The current price of Bitcoin is under the so-called ‘Max Pain level’ of $ 105,000. That is the price level at which most option holders suffer loss. Both buyers and sellers of options must therefore close their positions with losses. In practice, this often causes extra volatility, because parties try to move the course towards their profit point.
Ethereum follows a similar pattern. Today there is $ 588 million on ETH options, with a put-to-call ratio of 0.63 and a Max Pain level of $ 2,575. ETH is currently trading around $ 2,470, strongly below the critical level. Here too, extra volatility threatens.
Influence on the rest of the cryptomarket
Because Bitcoin and Ethereum are the largest cryptocurrencies, their price behavior often works in the rest of the market. A sharp movement around the expiry of option contracts can also drag along altcoins. Investors are doing well to follow market dynamics closely today.
Source: https://newsbit.nl/cryptomarkt-vreest-impact-van-miljardenopties-op-bitcoin-en-ethereum/
