Although cryptocurrency traders have been enthusiastic about price increases, many analysts will still focus on the expiration of large Bitcoin and Ethereum options that will end before Halloween. Skew.com data shows that the $750 million bitcoin option is about to expire and the price may fluctuate.
On Tuesday, the price of Bitcoin (BTC) on global exchanges hit an all-time high of $13,490 in 2020. Prices soared after news of the launch of a digital asset exchange by DBS, the largest bank in Southeast Asia.
Although prices have risen sharply this month, as many options are set to expire on October 30, the Bitcoin and Ethereum markets are expected to fluctuate this weekend. Professional data and analysis company Skew.com discussed this situation. On Twitter on October 25th.
“60k [in] Bitcoin options expire this week with a notional value of more than $750 million,” Skew Tweet. The main expiration not only coincides with the price increase, but also celebrates the 12th anniversary of the Bitcoin white paper the next day. In addition to Skew’s statistics, Deribit, the exchange that holds the most Bitcoin and Ethereum options contracts, published an article on “trading uncertainty” that expires on October 30.
Deribit has published a chart showing the current term structure of Deribit BTC options. The Deribit report states: “Due to the time value of options, the term structure tends to tilt upward.”
“However, the hump indicates that prices are expected to rise sharply within a certain period of time. Similar to the traditional market, the BTC market has been priced in the potential volatility from the election week of October 30 to November 6. This volatility will continue until at least the fourth quarter. At the end,” the crypto derivatives exchange added.
According to the latest news from Deribit’s cryptocurrency derivatives channel on Telegram, it was explained on October 26, 2020 that there are currently 61k BTC options that will expire on October 30, of which 40k are held in Deribit. In addition, 190,000 ETH options (US$76 million) will expire on the same day Deribit holds 164k.
Deribit’s encrypted derivative signal channel further raises a question:
This month, we saw [one] Monthly skew and Bitcoin test annual highs. Expires on October 30, 20, just a few days before the eagerly watched US election. Given that more than 7% of the expiring open positions are fixed at 13,000 strikes, will any early election news in the United States or some related stock market volatility trigger a Bitcoin breakthrough strike and trigger volatility?
On Tuesday, Skew tweeted about Deribit’s October expiration and said that the dealer may be long. The researcher said: “On Deribit, which expires in October, 12k, 12.5k, 13k and 14k calls for 2k + Bitcoin options are all open. Tweet. The biggest strike is 9k put options, with more than 5k options open. Judging from the October volume mark level (below 40 points), traders are likely to oppose underwriters for a long time. “
Of course, speculators put a lot of energy into the cryptocurrency futures and options market, and many times these secondary markets do nothing. For example, traders and analysts often talk about CME’s gaps that can never be filled, while options for large options are very boring. For example, crypto traders can expect significant volatility after speculating on Bitcoin options worth more than 87,000 that expire on September 25.
Similar to the upcoming expiration of Bitcoin and Ethereum options before Halloween, data from Deribit shows that the exchange holds 67k (77%) of the 87k contract on September 25. The historical BTC price statistics of the day showed that Bitcoin opened at $10,248 on the 25th and closed at a high of $10,771 in the afternoon. The options market has no effect on future spot market prices. After the large expiration, the Bitcoin market was not turbulent at all and has since risen by 24.4%.
What do you think of the $750 million + bitcoin option expiring on October 30? Let us know your thoughts on this topic in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons, Skew.com, Derbit, Twitter,
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