750 million of Bitcoin options will expire on October 30. The monthly CME Bitcoin futures contracts expire on the same date. This conjunction could trigger high volatility in the price of Bitcoin.
Bitcoin remains above $13,000 or 11,000 Euro. Traders and analysts – but also Bitcoin holders – still hope to see the price of the cryptocurrency continue to rise.
However, market events could disrupt this beautiful mechanism. Cointelegraph sees at least two reasons for the high volatility of Bitcoin’s value. The first is Bitcoin options.
On Friday, October 30, 750 million options will expire. Holders of these options will therefore have to adjust their contracts. They may do so before or just after the expiry date.
The possible side effect of such an expiry is therefore volatility in the price of bitcoins. “It is difficult to assess the volatility of Bitcoin options up to one or two days before they actually expire,” the site says.
However, October 30 is a major deadline for other Bitcoin investments. And it is this conjunction that could cause the most turbulence. The Bitcoin futures (CME) of the month, i.e. futures contracts, also expire on Friday.
“The upcoming expiration of the CME Bitcoin futures is particularly significant because of its high open interest,” said Cointelegraph. In addition, these CME futures now represent the second largest futures market for Bitcoin in terms of open interest.
What does this mean? This technical term refers to the total amount of open long and short contracts. Thus, when the open interest is high as it approaches expiration, this is likely to trigger high volatility.
However, Bitcoin has been benefiting from the growing interest of institutional investors in recent months. It has even now overtaken futures from Binance and other major crypto exchanges. The maturity of these futures contracts is therefore an indicator to be taken into account to predict possible fluctuations of Bitcoin.
Volatility need not, however, be synonymous with a sharp decline. Other criteria are involved in the dynamics of the BTC. It, therefore, remains to be seen whether the increase in volatility will favor the rally of the cryptocurrency or whether it will feed a sudden rejection and a fall in the price.