Historical, Activity near the monthly expiry of Bitcoin (BTC) futures and options has been blamed for the slowdown in upward momentum. Some 2019 studies found an average price drop of 2.3% for Bitcoin 40 hours before the settlement date for CME futures.
However, as Cointelegraph reported in June 2020, the effect wore off. While the potential negative impact of CME maturities in 2020 has not been recognized, what happened that year seems to confirm the theory. Bitcoin’s price was negatively impacted prior to the expiration of futures and options in the first three months of 2021.
Some investors and traders have pointed this out The incredible price increase in Bitcoin following the recent expiration dates of futures and options has become a trend.
$ BTC Options expire in approx. 8 hours …
The last Friday of each month has been a pretty good entry point for the past 8 months …
The price of the last 3 months has elapsed in the hours / days before the expiry
Observation no advice. Let’s see if the pattern applies. pic.twitter.com/3CJqI6m6jl
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$ BTC options expire in about 8 hours …
The last Friday of each month has been a good entry point for the last 8 months …
In the last 3 months the price was influenced in the hours / days before the expiry
Observation, not advice. Let’s see if the pattern applies.
BTC may have rallied in the days after it expired, but expanding this analysis shows an unsatisfactory trend.
Three consecutive events do not test a trend
The last 13 months were downright spectacular for Bitcoin The cryptocurrency grew 788%. August 2020 turned out to be the worst month as BTC posted a negative 7.5% return. Therefore, choosing random starting points is likely to show a similar positive trend within the month.
For example, if the “last quarter” moon phase is used as a proxy, the likelihood of a spike occurring after each event is very high.
As the picture shows Bitcoin price rose after five of the last six cases. The only conclusion that could be drawn is that Positive trends are more the norm than the exception in bullish rallies.
While there could be an explanation as to why Bitcoin was underperforming at the end of the month, it is only hypothesized.
While market makers and arbitration desks could benefit from lower prices after a rally, Other forces, including leverage futures longs and call option option holders, would make up for this.
Bitcoin price has not decreased in three of the last seven maturities
Therefore, It makes sense to analyze the potential price drop before it expires rather than looking for explanations for a rally during a bull market.
The October and December 2020 maturities did not show any negative pressure prior to this data.. The positive return of 12% in the five days leading up to the final expiry on April 30th also raises a big question mark about the importance of the CME futures event.
If you take that into account In three of the last seven cases, there was no price decline before the monthly expiration of the futures and optionsThis evidence should put a nail in the coffin of the unsubstantiated myth.
As mentioned above, Trying to develop theories about why sales reps acted more aggressively on certain dates is unlikely to work.
As mentioned earlier, Bitcoin’s price didn’t lag behind performance in three of the last seven maturities. A 57% success rate should not define a trend if positive performance has been shown to be common after a certain date during a bullish rally..
The points of view and opinions expressed here are exclusively those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risks. You must conduct your own investigation when making a decision.
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