As the price of bitcoin moved towards its 2019 highs close to the $14,000 and dropped back to under $13,500, cryptocurrency traders are on edge focusing on large bitcoin and ether options expiries set to end ahead of Halloween.
According to Skew.com, over $800 million worth of bitcoin options are set to expire this Friday, October 30, and given the volume crypto prices are expected to become more volatile in the near future. Data from CryptoCompare shows BTC is currently trading at $13,300, after hitting its 2020 high of $13,800 earlier this week.
The price of BTC has been moving up over the last few weeks, after PayPal announced a new service to start letting its users buy, sell, and hold bitcoin, ether, bitcoin cash, and litecoin on its platform. Singapore’s largest bank, DBS Bank, has recently confirmed plans to launch a bank-back digital asset exchange, the DBS Digital Exchange.
Despite the increased bullish sentiment in spot markets and the top cryptocurrency’s price performance, crypto markets are expected to become highly volatile at the time of the options expiry, as 62,000 BTC in options contracts will be settled.
A major crypto trading platform holding bitcoin had ether options contracts is Deribit. The exchange, as first reported by Bitcoin.com, published a report on the “trading uncertainty” associated with the options expiry on October 30.
The report noted that due “to the time value of options, the term structure tends to be upward sloping.” It adds:
- However, the humps demonstrate an expected sharp price movement in a particular period of time. Similar to the traditional markets, the BTC market has priced in potential volatility in the election week of October 30 until November 6.
Deribit’s report adds that the increased volatility “is expected to continue at least until the end of Q4.” Deribit’s crypto derivatives channel on Telegram has reportedly explained that out of the 62,000 BTC options expiring on October 30, 40,000 are held at Deribit.
Similarly, out of the 190,000 ETH options expiring that same day, 164,000 are held at Deribit. Taking this into account, the channel questions whether “any early unexpected US election news or movement in the partially correlated stock market could trigger Bitcoin to cross the strike price [of $13,000] and trigger a run on volatility?”
Skew also commented on Deribit’s open options, pointing out common strike prices:
While speculators in the crypto space often expected derivatives markets to heavily influence the spot market, it’s worth noting that back in September over 87,000 BTC on options expired, and the expected volatility wasn’t seen.
Featured image via Pixabay.
