$8.1 Billion Bitcoin options set to expire as bulls and bears prepare showdown

$8.1 billion Bitcoin options could expire at the end of the week.
A look at the current market conditions and behavior ahead of the main day.

As a seasoned crypto investor with a few battle scars from market volatility, I can’t help but feel a mix of anticipation and apprehension as we approach this week’s Bitcoin options expiry. The $8.1 billion worth of options set to expire on Friday is like a storm brewing on the horizon, capable of sending waves rippling through the market.

Has Bitcoin (BTC) experienced a significant surge in value over the past month, leading one to wonder how long the bulls can maintain their upward trend? There’s a possibility that a pullback could occur by the end of this week, potentially influenced by options expiration.

Approximately $8.1 billion worth of Bitcoin options are expected to expire this coming Friday, potentially leading to increased volatility in the cryptocurrency market over the next several days.

This is due to the fact that the expiration of these options might cause a substantial shift in the market’s behavior, but this will largely hinge on the current feelings of market investors.

The balance between calls and puts will determine the outcome. Higher call options align with a bullish sentiment and higher puts indicate bearish expectations.

Over the past few days, the Bitcoin Fear & Greed Index shows a predominant bullish sentiment among investors.

The feelings or attitudes about the market can shift, implying there could potentially be significant changes happening before the expiration date of those options.

Additionally, the put-call ratio together with the open interest has often served as a tool for assessing whether market participants are generally optimistic (bullish) or pessimistic (bearish).

In general terms, when the number of ‘put’ options (betting on a decrease) exceeds the number of ‘call’ options (betting on an increase), it’s often interpreted as a pessimistic signal, or bearish. Conversely, if the number of call options surpasses that of put options, it’s usually viewed as an optimistic signal, or bullish.

As per Barchart.com’s latest data, the Bitcoin put/call open interest ratio stood at approximately 1.12, whereas the put/call volume ratio, as of this moment, is roughly 5.

More Bitcoin volatility ahead?

Meanwhile, Open Interest and exchange reserves have both been on the rise in the last three weeks.

A large Open Interest suggests increased market volatility, while an increase in Bitcoin’s reserve at exchanges indicates that traders could be transferring their coins to trading platforms. Consequently, it seems that traders are readying themselves for potential selling if the market conditions change.

As both Open Interest and exchange reserves increase, it’s quite likely that call options could be more prevalent.

By the end of March 2021, the value of Bitcoin options contracts was approximately $6 billion. There was a general optimism towards the upcoming months, with investors favoring call options, which allow buyers to profit if the price of Bitcoin rises.

As a result, the price delivered a bullish performance in the following month.

In simple terms, Bitcoin’s current state resembles a pause during the last Friday of 2024 after a robust surge. Despite anticipation for a bearish reversal, the bulls have persisted in their momentum.

Read Bitcoin’s [BTC] Price Prediction 2024–2025

Although it doesn’t guarantee that the bulls will keep reinforcing their current momentum, it strongly suggests a likely scenario unfolding.

In essence, Bitcoin’s movement over the coming days will be influenced by whether there is more buying or selling activity.

2024-09-26 05:11

More Bitcoin volatility ahead?

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