Bitcoin is About to See Its Largest Quarterly Options Expiry Ever
It has been a rough past few days for Bitcoin and the aggregated cryptocurrency market, with sellers gaining full control after BTC following the benchmark digital asset’s inability to stabilize above $11,000. This selling pressure has struck a potentially lethal blow to BTC’s macro market structure, as the cryptocurrency now appears to be positioned to […]
It has been a rough past few days for Bitcoin and the aggregated cryptocurrency market, with sellers gaining full control after BTC following the benchmark digital asset’s inability to stabilize above $11,000.
This selling pressure has struck a potentially lethal blow to BTC’s macro market structure, as the cryptocurrency now appears to be positioned to see further near-term downside, potentially declining as low as $10,000 before it finds any significant buying pressure.
One factor that could contribute to the cryptocurrency’s volatility in the near-term is the imminent expiry of 87,000 quarterly BTC options contracts. Traders rolling over these positions or moving to cover them before the close could catalyze some turbulence.
The head of risk & product at Deribit – the largest crypto options trading platform – explained that there could be some spikes in trading volume based on a trend seen while looking towards BTC’s option skew.
Bitcoin Price Sees Turbulence as Sellers Catalyze Momentum
At the time of writing, Bitcoin is trading down nearly 5% at its current price of $10,450. This marks a massive decline from its recent highs of $11,200 set just before the crypto faced a strong rejection.
The selling pressure here was significant, leading BTC to enter a prolonged consolidation phase within the upper-$10,000 region.
Bears gained an edge over bulls, with a confluence of different factors helping catalyze today’s sharp selloff.
A few factors that likely perpetuated this recent downside volatility are stock market turbulence, strength in the US Dollar, and weakness amongst overheated DeFi altcoins.
The confluence of these factors placed some immense pressure on Bitcoin, and it now appears to be poised to see further near-term downside. The next key support level to watch sits around $10,000.
BTC About to See a Massive Quarterly Options Expiry
This Friday, a total of 87,000 Bitcoin quarterly options contracts are set to expire, making this the largest ever seen.
Options trading platform Deribit explained in a recent note that this could lead to heightened volatility in the days and hours before the expiration.
Shaun Fernando, the head of risk and product at Deribit, spoke about this, saying:
“The 1 month ATM volatility hit a high of 70% before falling to its level of 46% and we have seen volatility in the skew. The Deribit Index is currently trading more than 2.5% below the settlement of nearly 4 hours ago which could suggest some interesting realised vs implied strategies. If the trend carries, expect a run on [volume]…”
Watching the market dynamic heading into this option expiry will offer insight into where the entire market may trend in the near-term.
Featured image from Unsplash. Pricing data from TradingView.