Bitcoin put-call ratio turns pessimistic ahead of Friday's quarterly expiry

The put-call ratio for bitcoin option on Deribit leading up to today's expiry has risen to 1.66. A ratio above one means significantly more put options than call options being traded. This indicates that more investors are betting on or hedging against a price decline rather than an increase.

Deribit end-of-June options data shows 107,000 bitcoin options are expiring with a max pain point of $61,500 and a notional value of $6.6 billion. As of the time of writing, bitcoin is priced at $61,398, approaching the max-pain point ahead of today's expiry. This indicates that the bitcoin price is nearing the level where the most options will expire worthless. Traders might be positioning themselves to benefit from this alignment, potentially leading to reduced volatility and increased market stability around the expiry.

Today marks the quarterly options expiry for both outstanding bitcoin and ether contracts, with a combined notional value exceeding $10 billion set to expire on Deribit. This significant event represents more than 40% of Deribit's current open interest.

According to Deribit CEO Luuk Strijers, Friday’s large quarterly expiry could be potentially influenced by a "quadruple witching" and related volatility in U.S. markets. A quadruple witching occurs four times a year, around the end of each quarter, when contracts for index futures, index options, options and futures all expire simultaneously.

The large volume of contracts expiring can impact spot prices, as the unwinding of positions and the rolling over of contracts can lead to significant price movements. However, the spot price nearing the max pain point might mitigate some of this effect since the max pain point represents the maximum number of options contracts expiring worthless.