Bitcoin’s Market Dynamics

BTC $106,229.85

Bitcoin’s put-call ratio has surged ahead of Friday’s significant options expiry on Deribit. However, its traditional bearish interpretation may not fully capture the current market dynamics.

Understanding Put-Call Ratio

The put-call open interest ratio indicates the balance of active put contracts to active call contracts. An increase in this ratio suggests a bias towards put options, reflecting market sentiment that leans bearish. However, the recent rise is at least partially fueled by “cash-secured puts”—a strategy for yield generation and Bitcoin accumulation. This involves writing put options, akin to providing insurance against price declines in exchange for a small upfront premium.

While writing the put option, the writer maintains sufficient cash reserves (in stablecoins) to purchase BTC if prices drop and the buyer decides to exercise their right to sell at the established higher price. The premium from the written put option serves as a yield, potentially leading to BTC accumulation if exercised by the buyer.

Lin Chen, head of business development – Asia at Deribit, noted, “The put/call ratio has risen to 0.72—up from just above 0.5 in 2024—indicating increased interest in put options, often structured as cash-secured puts.”

Large Options Expiry Ahead

On Friday at 08:00 UTC, 141,271 BTC options contracts valued at over $14 billion, constituting more than 40% of total open interest, are set to expire on Deribit according to Deribit Metrics.

Out of these, 81,994 contracts are calls while the remaining are puts. Each options contract corresponds to one BTC on Deribit. Chen highlighted that nearly 20% of expiring calls are “in-the-money (profitable),” indicating that many participants hold calls at strikes lower than BTC’s current market rate of $106,000. This points to successful call buying, coinciding with ongoing inflows into BTC ETFs.

ITM call holders could realize profits or hedge positions as expiry approaches, potentially increasing market volatility, or choose to roll over their positions into the next expiry. “Given this is a significant quarterly expiry, we anticipate heightened volatility around the event,” Chen added.

Open Interest Distribution

Most of the calls may expire out-of-the-money or worthless, with the $300 call showing the highest open interest, suggesting traders anticipated a substantial price increase in the first half.

The max pain point for the expiry stands at $102,000, a price level where option buyers are likely to incur maximum losses.

Market Focus: $100K-$105K Range

Recent market flows indicate expectations of fluctuating trading patterns with a slight bullish bias leading up to expiry. According to data from Wintermute, recent trades are showing a neutral skew with straddle selling (a volatility bearish tactic) around $105,000 and shorting puts at $100,000 for the June 27 expiry.

“For BTC options, flows indicate a neutral bias with call selling around 105K and short puts at 100K (June 27), suggesting expectations for tight price action into expiry. Selective call buying (at $108K–$112K for July and September) adds a controlled bullish sentiment. IV remains elevated,” stated the OTC desk at Wintermute in correspondence with CoinDesk.

Read more: Bitcoin Could Spike to $120K, Here Are 4 Factors Boosting the Case for a BTC Bull Run