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BTC option expiry worth $1 Billion round the corner

Photo of: Dennis Ramos
by Dennis Ramos

Right from September Bitcoin traders and investors have already faced a lot of volatility in terms of Bitcoin price movements. We saw how the Bitcoin prices suddenly dropped in early September. The price which was $12,000 at the end of August, broke off the new threshold to drop to lower levels of around $10,000. The price depreciation was due to a larger market sell-off before it experienced some recoil. And now this week further bracing is much needed because nearly half of $2 Billion worth of Bitcoin options are about to expire, and this could give rise to huge impending volatility. 

The open interest for Bitcoin is showing healthy increases and has climbed to $1.9 billion. The figure is almost triple to that of what it was just a few months ago as per the crypto analytics and Bitcoin analytics provider Skew. And now with about 47% of existing options contracts coming for a due expiry this Friday, it will be difficult to say at this point. 

Source: Skew

The bar graph above displays the BTC option contracts due for expiry. Just by looking at the graph, we can see how this week is crucial because we are talking about how a little above 80,000 BTC contracts worth almost $1 billion are up this week. The expiry options could bring about a fresh set of price volatility. The previous history about option expiry has noticed to bounce on an aggressive note as per a few analysts. The huge increase in the Bitcoin Options market in 2020 was initiated by Derbit which is a Panama-based derivatives exchange that accounts for quite a sizeable proportion in the Bitcoin options contracts. We can also put into some analysis the reason behind the huge surge in this week’s BTC option contract which stands tallest among all.

Source: Twitter

Also, the avid watchers of Bitcoin were encouraged recently when Bitcoin bounced at $10k levels. Alex Kuptsikevich, the FXPro, a senior financial analyst said in an email, that Bitcoin has managed to resist the bear’s pressure below the $10,000 level. This way it has saved itself from going down towards $9000 levels and below. He further added that the market is also seeing an increasing interest from institutional investors now after registering some stagnation managing some signs of relief in the market for Bitcoin. The prevailing optimism and goodwill of Bitcoin has more shaped thanks to Bitcoin being seen as a long-term token and a store of value. The interest of investors especially institutional investors represents how Bitcoin despite its volatility and fluctuations is still seen as the preferred token. 

Alex Kuptsikevich, the FXPro, a senior financial analyst further continued and opined  on this:

“It is worth paying attention to the reduced volatility in bitcoin in recent days, along with cautious price growth. This is more akin to careful buying following the optimism of global markets, rather than going all-in on the prevailing optimism.”