This Friday’s Bitcoin (BTC) futures and options expiry has been causing anxiety and excitement amongst traders as the price has oscillated with no clear trend for the past 30 days. 

There have been moments of euphoria as the price briefly broke the $10,000 level earlier this month, but recently emotions have become slightly bearish as the market dropped below $9,000 on Wednesday night.

Bitcoin (USD) versus S&P 500 mini futures

Bitcoin (USD) versus S&P 500 mini futures. Source: TradingView

Correlation does not mean causation

Correlations between crypto and traditional markets were all the rage leading into the Bitcoin halving, but now it seems most traders have forgotten that the recent increase in correlation between Bitcoin and the S&P 500 could be the root of BTC’s current price volatility. 

There’s not much gain in trying to understand the rationale behind this, although recent declining volume both in spot and derivatives exchanges certainly makes it easier for algorithmic traders to impose their will.

Bitcoin 3-day volume - Bitstamp (BTC) and BitMEX (USD mil)

Bitcoin 3-day volume - Bitstamp (BTC) and BitMEX (USD mil). Source: TradingView

This ongoing heated debate on whether Bitcoin futures and options could be the main factor behind the recent volatility seems somewhat pointless as there will always be players positioning for an upside, while short-sellers are expecting a negative price move.

Open interest can be deceiving

After all, the numbers are quite staggering. Currently, the total BTC futures open interest is over $3.8 billion, while options markets’ open interest has just reached an all-time high at $1.7 billion. 

But the question is, what exactly is behind those numbers?

Bitcoin implied volatility

Bitcoin implied volatility. Source: Skew

There is less than a day before the June 26 expiry, and Bitcoin’s volatility is at the lowest levels since the March 12 crash. Low volatility typically indicates that professional traders are not expecting huge price swings, dimming option markets premiums.

June Bitcoin call options

June Bitcoin call options. Source: Deribit

Notice how the above data from Deribit shows a staggering amount of more than 30,000 call option contracts from $10,500 to $32,000. With less than half a day for June expiry, most are deemed worthless by Deribit’s mark price. 

Furthermore, there’s not even a single buyer for most of those strikes. That’s over $300 million worth of open interest that should not have been accounted for.

The same can be said of the 21,000 put option contracts from $8,000 down to $2,500, which are also deemed worthless. This adds another $190 million to Deribit’s total open interest.

Deribit leads options markets, but CME is catching up

Bitcoin options total open interest

Bitcoin options total open interest. Source: Skew

Deribit has a total of $1.3 billion in open interest, followed by the Chicago Mercantile Exchange (CME) with $439 million.

June Bitcoin put options

June Bitcoin put options. Source: Deribit

There are 8,500 contracts of put options (bearish) currently in the money, ranging from $8,500 to $12,000 strikes mostly. A 15% price drop from the current $9,250 level to $7,865 would add a mere $11 million to this put option buyers profits. 

This also assumes that none of those are merely hedge positions, meaning the buyer is also carrying a long position elsewhere.

BTC option calls open interest (contracts)

BTC option calls open interest (contracts). Source: CME

95% of CME June call options have $10,500 strikes or above, marked with $7 or less per contract by the exchange. Each CME contract represents 5 BTC, so those out of the money contracts amount to $250 million out of CME’s total $440 million total options open interest.

There are currently 830 put option contracts open at CME, mostly at $8,500 and $8,700. A 15% BTC price drop would entice $5 million for these contracts’ buyers, which is not a significant amount. 

Once again, a relevant portion might be hedged, so there is essentially no profit for those put option buyers. 

Both options and futures are leaning bullish

At the moment, options markets display no bearish strength, at least not for Friday’s expiry. As Cointelegraph reported earlier this week, there is $665 million in open interest on futures contracts maturing on June 26. These are dominated by bullish indicators of contango and top traders long/short net positions.

It all points to a neutral or positive market sentiment for tomorrow’s futures and options expiry. OKEx and Deribit options and futures are set to expire at 8:00 AM (UTC) on June 26, and the CME a few hours later at 3:00 PM (UTC).

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.