Bitcoin and cryptocurrency prices fell off a cliff over the the last few days as fears gripped global markets that the collapse of troubled China property developer Evergrande could spark a financial meltdown.
The bitcoin price has lost more than 10% over the last three days, with the price of other major cryptocurrencies ethereum, cardano, Binance’s BNB, Ripple’s XRP and solana falling even further after making huge gains.
Now, investors are turning their attention to the $3.4 billion worth of bitcoin options that expire this Friday—one of the largest options expiries this year.
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The bitcoin price has fallen sharply this week, knocking the price of ethereum, cardano, Binance’s … [+]
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Bitcoin options contracts—allowing investors to buy or sell the cryptocurrency at a specified price within a set time period—worth around almost 80,000 bitcoin, or around $3.4 billion at today’s prices, will expire on Friday, according to data from cryptocurrency analytics provider Skew and first reported by crypto news site ABMCrypto.
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Bitcoin’s looming options expiry could spark a bout of price volatility, with previous large expiries catching investor attention. The size of the bitcoin open interest market has soared over the last year, more than doubling since last summer.
Trading data shows that speculators are feeling upbeat about bitcoin ahead of the $3.4 billion options expiry. There is currently more open interest in “call options” (bets that the bitcoin price will rise) than in “puts” (bets the price will fall).
However, the bitcoin and crypto price crash over the last few days means that many of the bullish contracts are set to be liquidated—and some market watchers have warned the bitcoin price could sink lower.
“Bitcoin has lost support at the $44,000 mark and looks set to test its $39,000 floor,” Tim Frost, the chief executive of decentralized finance investment platform Yield App, said in emailed comments. “If it falls through here we can expect a significant correction to come.”
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The bitcoin market is headed for a major options expiry this Friday, potentially signaling further … [+]
Skew
The price of bitcoin and other cryptocurrencies, including other top ten cryptocurrencies ethereum, cardano, Binance’s BNB, Ripple’s XRP and solana, are expected to remain under pressure this week due to the “risk-off sentiment” caused by growing concerns around the potential Evergrande collapse.
“There is a marketwide move to risk-off sentiment triggered by concerns around the Evergrande collapse and the implications it could have on Chinese markets, other debt markets and supply chains,” Noelle Acheson, head of market insights at digital currency prime broker Genesis, said in emailed comments. “Whenever there are market wobbles, bitcoin is hit because it’s a risk-off market.”
Bitcoin sentiment is also low due to September historically being one of the more lackluster months for the bitcoin price, with data showing bitcoin has only posted positive gains in September twice since 2013—in 2015 and 2016.
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