Large Options Market Expiry Set For Friday, Bitcoin Price Volatility Is Expected

Bitcoin options trading volume has hit new heights over the past month as it has sustained itself above the $7 million marker and surpassed $30 million on several occasions, Skew data shows.

Bitcoin open interest contracts currently stand above the $2 billion marker, a sign of a healthy market. On Sunday, September 20, the put-call ratio stood at 0.70 for open interest which leans slightly bearish.

However, even if the expiry pulls the spot market down the sell-off will likely be absorbed quickly. The supply of BTC moving onto exchanges has slowed over the past month from a high of above $1.5 billion at the start of September down to under $4 million by Sunday, September 20. While supply of Bitcoin on exchanges has dropped, demand has remained relatively steady. This suggests that even if the options expiry causes a steep price drop, the market could recover quickly as lingering demand absorbs liquidated options contracts.

In addition to a slowed supply and steady demand, institutional investors are showing more interest in buying Bitcoin which is often reflected in the options market. Business intelligence company Microstrategy recently dubbed Bitcoin its primary reserve currency buying up $425 million worth of the asset. The move may be enough to inspire other companies to join the cryptocurrency wave.

While large options expiries often seem like they will pull the spot market either up or down, Friday’s expiry may bring some price volatility but leave the market relatively uneffected.

By Emily Mason​

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