Bitcoin (BTC) Witnessed Steep Corrections Ahead Of Options Expiry – Are We Expecting A Bitcoin Crash?

Bitcoin (BTC), the largest cryptocurrency experienced a significant 10% correction, dropping to $65,500 from its recent ATH. This decrease in Bitcoin’s (BTC) value is attributed to the market’s overall volatility, with investors anxiously anticipating the expiration of Bitcoin options on Friday. 

As reported by Greeks.Live, Bitcoin’s Dvol fell below 70%, showing a persistent decline in implied volatility as observed in March. Recent block trade activity showed a decline, marked by whales acquiring put options following the Bitcoin halving. 

This significant margin offered to these large investors underscores the significance of monitoring their subsequent moves. The data also reveals that approximately 18,000 BTC options, with a put-call ratio of 0.64 and a notional value of $1.2 billion are nearing expiry at a strike price of $68,000.

The crypto market witnessed a weaker performance this week, with selling tractions emerging as the dominant trade of the week, along with a notable decrease in implied volatilities across all major terms. While Bitcoin is benefiting from post-halving support, other cryptocurrencies are grappling with a short-term bearish trend. Furthermore, the market has experienced a decrease in ETF inflows lately, attributed to the absorption of premiums from ETFs. 

Bitcoin Crash Warning

Ethena Labs has revealed its latest strategic initiative: incorporating Bitcoin (BTC) as collateral for its synthetic dollar-pegged product, USDe. This strategic move is designed to increase the product’s supply from its existing $2 billion, capitalizing on the growing BTC derivative markets to enhanced scalability and liquidity and delta hedging practices. 

This initiative hasn’t gone without scrutiny. Ki Young Ju, CEO of the analytics firm CryptoQuant has expressed his thoughts, comparing the situation to the well-known LUNA collapse and raising doubts about Ethena Labs’ risk management strategies. 

“This isn’t good news for Bitcoin holders—it sounds like a potential contagion risk, like LUNA. How do they maintain a delta-neutral strategy for BTC in bear markets?” Ju stated. He believes that the success of such strategies is largely contingent on market conditions that favor bull runs. 

Highlighting the recent challenges of BTC during bear markets, he hinted that the market capacity for such transactions might be smaller than the total value locked (TVL), potentially resulting in substantial market disruptions. 

At press time, BTC traded at $66,687.47