Crypto Markets Nervously Tiptoe Toward Expiry: Will Pain Trade or Panic Take the Stage?

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Over $8.72 billion in Bitcoin and Ethereum options expire today, marking February’s largest derivatives event.

The expiring options place the crypto market at a critical inflection point, with volatility elevated and sentiment fragile-like a teacup made of glass and anxiety.

February’s $8.72 Billion Expiry Crossroads: Will Bitcoin and Ethereum Face the Pain Trade?

Bitcoin accounts for the lion’s share of the exposure, with 114,705 contracts representing $7.74 billion in notional value heading into settlement. One might say it’s the financial equivalent of a dragon guarding a hoard of coins… just slightly less fire-breathing.

Ethereum follows with 478,992 contracts worth approximately $975 million. Combined, the expiries account for roughly 20% of total open interest, suggesting their potential market impact-like a small army of squirrels trying to carry off a nut vault.

At current prices, both assets sit notably below their respective “max pain” levels or the strike price at which the greatest number of options expire worthless. A situation akin to standing outside a dragon’s hoard and realizing you forgot your key.

Bitcoin was trading for $68,052, compared to a max pain level of $75,000. Ethereum changes hands near $2,035, below its $2,200 max pain threshold. One wonders if the market’s emotional resilience is as robust as a teacup’s.

Call open interest (OI) dominates across both assets. Bitcoin shows 66,300 call contracts versus 48,405 puts, giving a put-to-call ratio of 0.73. Ethereum’s ratio stands at 0.78, with 268,642 calls and 210,350 puts outstanding. The market’s collective optimism: a tightrope walker with a fear of heights.

Analysts at Deribit note that call OI leads across both majors, with Bitcoin carrying the significantly larger notional weight into settlement. This factor could amplify spot sensitivity if hedging flows intensify-like trying to balance a soup bowl on your head during a hurricane.

Volatility Divergence Signals Unease

Meanwhile, volatility metrics reveal a nuanced picture. According to Deribit data, Bitcoin’s DVOL index sits at 53, with an implied volatility (IV) percentile of 87.7, which is elevated relative to its historical range. Imagine a nervous hedgehog in a room full of porcupines.

Ethereum’s DVOL is higher in absolute terms at 70, but its IV percentile of 55.7 suggests it is less extreme than its historical behavior. One might say it’s the calm before the storm, or perhaps the calm before someone accidentally unplugs the Wi-Fi.

A deeper look at tomorrow’s February-end expiry.

BTC DVOL is currently sitting at 53 with an IV percentile of 87.7 – elevated relative to historical data.

ETH DVOL is at 70 but IV percentile of just 55.7 – high in absolute terms but unremarkable historically.

Vol is being…

– Deribit (@DeribitOfficial) February 26, 2026

Still, Ethereum volatility is running approximately 15-20 points above Bitcoin across the curve. It indicates traders are pricing in materially higher uncertainty across ETH maturities. Perhaps they’ve been reading too many headlines about “ether” and “ethics.”

Term structure remains in contango for both assets, with a front-end volatility premium concentrated around the February expiry. Like a clown car full of economists, everyone wants out at once.

Fear Unwinds, But Conviction Lags

Earlier this month, 25-delta skew for both Bitcoin and Ethereum plunged toward -30, reflecting intense demand for downside protection as prices slid sharply. Imagine a crowd of investors with umbrellas in a hurricane, all hoping it’s just drizzle.

Since then, skew has steadily recovered to around -8 to -9, signaling that panic hedging has eased. However, skew remains negative, indicating the market has not fully shaken off its defensive posture. Against this backdrop, analysts at Greeks.live describe the broader market as sluggish. One might say it’s the financial equivalent of a sloth in a bank vault.

February 27 Options Expiration Data
116,000 BTC options expired, with a Put-Call Ratio of 0.76, maximum pain point at $75,000, and notional value of $7.9 billion.
206,000 ETH options expired, with a Put-Call Ratio of 0.77, maximum pain point at $2,200, and notional value of $980…

– Greeks.live (@GreeksLive) February 26, 2026

In early February, Bitcoin briefly tested the $60,000 psychological threshold and has since oscillated weakly above it. Like a toddler learning to walk, it’s wobbling between hope and despair.

While a recent two-day rebound lifted implied volatility (with BTC main-term IV at 47% and ETH at 65%) confidence remains thin. One might say it’s the market’s version of a confidence trick-except the trick is on itself.

“The downward price trend has eased, but market confidence remains insufficient,” Greeks.live noted, adding that large-block call options have dominated recent trading activity, particularly in medium- to long-term maturities. It’s like betting on a horse race where the horses are made of Jell-O.

Skew metrics rebounding indicates emerging bottom-fishing activity, but the firm cautions that the market remains firmly in bear territory. Perhaps it’s the financial equivalent of a bear wearing a top hat and monocle, sipping tea with a side of pessimism.

Crucially, analysts argue that the crypto market lacks fresh capital inflows and clear catalysts, with pessimistic narratives still dominating social channels. Despite signs that extreme fear is unwinding, conviction behind the rebound appears tentative. Like a mouse wearing a top hat, it’s bold but fragile.

With both Bitcoin and Ethereum trading well below their max pain levels, spot prices could gravitate higher heading into today’s options expiry. Such an outcome could intensify a potential “pain trade.”

However, subdued demand could allow volatility to compress after expiry, with derivatives markets pricing less panic, but not yet a return of confidence. Perhaps the market will finally learn that confidence is a renewable resource-or at least a renewable illusion.

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2026-02-27 08:02