Renewed Bullishness Expected After Bitcoin, Ether's $10B Options Expiry on Friday

• The size of the impending BTC, ETH options expiry represents over 40% of total notional options open interest on Deribit.
• Over 25% of options are set to expire "in the money."
• Traders anticipate a renewed bullish shift in bitcoin and ether next month.

It's that time again when discussions about activity in the crypto derivatives take precedence.

On Friday at 08:00 UTC, bitcoin BTC$92,402.06 options worth $6.68 billion and ether ETH$3,361.36 options worth $3.5 billion are set to expire on the leading crypto derivatives exchange Deribit.

The impending expiry, which represents over 40% of the current cumulative open interest of over $23 billion, could trigger a surge in market volatility. Large quarterly expiries often lead to increased volatility, making prices more unpredictable due to higher trading volumes and the closing/rollover of positions.

"As we approach Friday's large quarterly expiry, potentially influenced by 'quadruple witching' and related volatility in U.S. stock markets, over 25% of Deribit open interest is set to expire in-the-money, equating to over $2.7 billion. The total notional size of the expiry is over $10 billion," Luuk Strijers, chief executive officer at Deribit, told Coindesk in an interview.

Options are derivative contracts that give the holder the right but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call gives the right to buy, while a put offers the right to sell. On Deribit, one options contract represents one BTC or ETH.

Having more than 25% of open interest set to expire in the money means a significant number of derivative contracts are expected to be profitable for their holders at expirations.

Bitcoin, the leading cryptocurrency by market value, has dropped nearly 9% this month, testing bargain hunters below $60,000 at one point. As usual, the sell-off has weighed over the broader market, pulling ether down by almost 10%.

"The recent price drop was caused by miner sales, some pressure from German-seized BTC, and, of course, the imminent transfer of Mt. Gox coins expected in early July," Strijers said.

Still, call-put skews show investors are willing to pay a higher premium for near-term and long-term calls offering asymmetric upside than puts, according to data tracked by Amberdata.

"While short-term bearish sentiment is evident, traders anticipate a positive shift for bitcoin by July 12 and ETH by July 5, looking at options skew. Trading in the ETH ETF is expected to start in the first week of July," Strijers noted.