At the end of the month, there may be a significant increase in bitcoin (BTC) volatility, as two main factors play a role here. The BTC options market is approaching a huge expiration of $ 750 million, and open interest in the futures market on the Chicago Mercantile Exchange has skyrocketed.

When options are close to expiration, option contract holders must change their contracts before or immediately after the expiration. This can often lead to fluctuations in the price of bitcoins.

Open interest rate options. Source: Skew
Monthly closing, alternative expiration and CME expiration are the same.
It is difficult to measure the volatility of Bitcoin options earlier than a day or two before the actual expiration date. But the upcoming expiration, which will take place on the last Friday of the month, coincides with other important dates.

According to CME Bitcoin Futures Calendar, the October contract expires on October 30. All monthly CME bitcoin futures contracts expire on the last Friday of each month.

The upcoming expiration of CME Bitcoin Futures is especially important given the high open interest.

As Cointelegraph reported last week, the Chicago Mercantile Exchange has become the second largest market for bitcoin futures with the largest open interest, surpassing Binance Futures and other major exchanges.

Since CME is designed specifically for certified investors and organizations, CME Bitcoin futures market, which surpasses major cryptocurrency exchanges, has a different meaning. Remarkably, this indicates that the demand for BTC from institutions has never been so high.

The term “open interest rate” refers to the total amount of long and short contracts that are open in the market. Therefore, if open interest is high on the verge of expiration, it can lead to a lot of volatility.

Apart from upcoming options and future expiration, Bitcoin is also looking forward to an important monthly close.

On October 26, at the end of the weekly light, Bitcoin officially identified the first completed weekly light over $ 13,000 since January 2018.

If the BTC stays above $ 13,000 through November, it will confirm that the first monthly light closed above $ 13,000 in almost three years.

Weekly chart for Bitcoin price. Source: TradingView.com
Researchers at Skew said the “organic” nature of Bitcoin’s ongoing rally could increase the chances of a long-term trend. Bitcoin options are priced at 7%, and BTC will hit $ 20,000 over the next two months, reports Cointelegraph.

Will BTC keep pace?
Whether the expected increase in volatility will help Bitcoin or cause a sharp decline depends on Bitcoin’s speed.

If the bitcoin price can stay above $ 13,000 until the end of the month, it will increase the chances of continuing the rally during the downturn.

Technical analysts, including a trader named Bitcoin Jack, say Bitcoin’s current technical structure is optimistic. The merchant said:

“ The average 200-day BTC (green), consistently above average (orange), so close to half, has never failed to trigger a supply vacuum rally. This is fundamentally programmed in bitcoin, and as long as there is demand, the other will not break. When I checked it, the request is there. ”
The steady increase in the price of bitcoin, despite on-chain data indicating a mine sale, also shows that new demand is flowing into the market.

The pressure from existing players, miners and investors is offset by the introduction of new capital in the cryptocurrency market.

After the last options expired on September 25, the bitcoin price increased from $ 10,686 to $ 11,720 over the next sixteen days. At the time, Cointelegraph reported that volatility could be triggered by the expiration of the September options.

Source: CoinTelegraph

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