The crypto market is set for a significant options expiry event this Friday, involving approximately 147,000 Bitcoin contracts and 573,000 Ethereum contracts. This large-scale expiry follows a period of intense deleveraging that has reset positioning across the derivatives market.

Data indicates a bullish tilt among traders leading into the event. The expiring Bitcoin options have a put/call ratio of 0.58, showing a greater number of long contracts compared to short positions. Ethereum options show a similar sentiment with a put/call ratio of 0.50. A high concentration of open interest is clustered around the “max pain” strike price—the level at which the largest number of options contracts would expire worthless.

Leverage Washout Reshapes Market

This week’s expiry follows what analytics firm CryptoQuant described as the largest drop in open interest of the current cycle. The firm characterized the sharp decline not as the beginning of a bear market but as a major leverage washout that flushed out over-leveraged positions. The market environment was also shaped by U.S. Producer Price Index (PPI) inflation data released this week, which came in higher than economists expected.

According to the derivatives exchange Deribit, market positioning has since stabilized after the recent volatility. The exchange noted that positioning has cooled to a more neutral stance around a key support and resistance zone. Deribit also suggested that elevated call interest might signal improving sentiment among investors.

Over the past 24 hours, the total cryptocurrency market capitalization has remained relatively steady. Bitcoin has tested key resistance levels multiple times but has yet to break through, while Ethereum traded below its own significant resistance level during Asian trading hours.