In brief:
- Approximately 62,000 BTC options expire this Friday, 28th August.
- The expiration of Bitcoin futures and options is known to have a significant impact on the price of BTC.
- A possible scenario is Bitcoin testing $11,200 or even $11,000 before or after Friday.
The last week of every Bitcoin trading month is significant in the sense that it coincides with the expiration of BTC derivatives products such as futures and options. With respect to the former, there is a widely held belief amongst crypto traders that the expiration of CME Bitcoin futures on the last Friday of every month, has a negative impact on the price of BTC.
Over 62,000 BTC Options Expire on the 28th
However, Bitcoin trading has matured and the CME group, alongside multiple crypto exchanges such as Binance and Deribit, now offer BTC Options. According to the team at Skew.com, a total of 62,000 BTC options expire this Friday, August 28th. The team made public their observation of the current state of the Bitcoin markets via the following tweet.
62k #bitcoin options expiring this week pic.twitter.com/htxH9vk1yg
— skew (@skewdotcom) August 24, 2020
Expiry of 62k BTC Options Could Mean Volatility
The expiration of such a large amount of Bitcoin options is expected to bring some volatility between now and Friday. This volatility could see Bitcoin’s rising wedge playing out and the value of BTC dropping to as low as $11,000. This scenario has been described by the team at Crypterium as follows.
According to technical analysis, the picture remains the same: a rising wedge and strong bearish divergences on the indicators. All of this tells a decline to at least $11,000.
However, the lull may not last long. On August 28, options are expected to expire in the amount of 62,000 BTC or ~ $7 billion. It can lead to a significant increase in volatility and a sharp change in the price of the first cryptocurrency.
Conclusion
A record 62,000 BTC options expire this Friday and significant Bitcoin volatility could accompany their expiry. Through technical analysis, a move down seems more probable given Bitcoin’s rising wedge pattern that could have BTC fall to as low as $11,000.
As with all analyses of Bitcoin, traders and investors are advised to use adequate stop losses and low leverage when trading BTC on the various derivatives platforms.