A sharp spike in Bitcoin (BTC) volatility could happen later this month as two main factors come into play. The BTC options market is nearing a massive $ 750 million decline, and the open interest of the CME futures market has also skyrocketed.
If an option is about to expire, holders of option contracts must adjust their contracts before or shortly after it expires. Often times, this can lead to bitcoin price volatility.
The monthly closing, the expiration of the option and the expiration of the CME futures coincide
It is difficult to measure the volatility of Bitcoin options until a day or two before they expire. However, the next expiration, which would occur on the last Friday of the month, coincides with other important dates.
According to CME’s Bitcoin futures schedule, the October futures contract will expire on October 30th. All of CME’s monthly Bitcoin futures contracts expire on the last Friday of each month.
The upcoming expiration of CME’s Bitcoin futures contracts is particularly important because of their high open interest.
As Cointelegraph reported last week, CME became the second largest Bitcoin futures market due to its open positions, outperforming the futures of Binance and other major exchanges.
Since CME addresses investors and accredited institutes, CME’s bitcoin futures market, outperforming major cryptocurrency exchanges, is of varying importance. In particular, this shows that the demand for BTC from institutions has never been higher.
The term open interest refers to the total number of long and short contracts open in the market. If the open interest is high near maturity, it can lead to high volatility.
In addition to the highly anticipated expiration times of options and futures Bitcoin is also nearing a big month-end closing.
On October 26th, with weekly candlelight, Bitcoin officially marked its first completed weekly candle above $ 13,000 since January 2018.
If BTC holds above $ 13,000 by November, it would confirm its first month-end closing above $ 13,000 in nearly three years.
Skew researchers said The “organic” nature of Bitcoin’s current surge could increase the likelihood of a sustained uptrend. As Cointelegraph reported, Bitcoin options have a 7% chance BTC will hit $ 20,000 in the next two months.
Can BTC keep its momentum?
Yes The expected spike in volatility would help BTC or would fuel a strong pushback, depends on the dynamics of BTC.
If the price of Bitcoin can stay above $ 13,000 by the end of the month, The chances of continuing the rally above a pullback would increase.
Technical analysts, including pseudonym dealer Bitcoin Jack, claim that Bitcoin’s current technical structure is optimistic. The dealer He said::
“The trend that the 200-day average of BTC (green) is above the all-time average (orange) at the time of halving has always triggered an increase caused by the supply gap. This is basically programmed in Bitcoin and as long as there is demand it won’t break. The last time I checked, the lawsuit was there. “
Bitcoin’s continued rise in price shows this too, although the chain’s data suggests a sale by miners new demand flows into the market.
The selling pressure from existing players, miners and investors is balanced by new capital this is entry into the cryptocurrency market.
After the last options expired on September 25, the price of Bitcoin rose from $ 10,686 to $ 11,720 in the next 16 days. At the time, Cointelegraph reported that The volatility could result from the expiration of the September options.