Bitcoin’s options expiry day arrives on September 6, 2024, many are wondering if this week’s contract expirations could reverse the current market trend. With Bitcoin prices under pressure and significant market fluctuations, this expiry could be a pivotal moment for investors and traders.

What’s at Stake?

This Friday, around 13,500 Bitcoin options contracts are set to expire. These contracts hold a combined notional value of approximately $776 million. While this number might seem large, it’s notably smaller compared to last week’s substantial end-of-month expiry, suggesting that its impact on the market might be less pronounced.

Understanding the Options Expiry

Bitcoin options come in two types: calls and puts. Calls give holders the right to buy Bitcoin at a set price, while puts give the right to sell. The put/call ratio for this week’s options is 0.82, indicating a slightly higher number of call options compared to put options. This suggests that more traders are betting on a potential rise in Bitcoin’s price rather than a decline.

The open interest, which reflects the total value of contracts yet to expire, remains significant. Strike prices for Bitcoin options show substantial open interest at levels such as $70,000, $75,000, $90,000, and even $100,000. This indicates that many investors are holding onto hopes for a price surge, despite current market conditions.

Current Market Sentiment

The Bitcoin market has been struggling recently, with the price falling below $56,000. The Fear and Greed Index, a measure of market sentiment, has dropped back into the “extreme fear” zone. This sentiment is mirrored by a recent dip in Bitcoin’s price to an intraday low of $55,800, although it has since slightly recovered to around $56,300.

Analysts Weigh In

Market analysts are keeping a close eye on this week’s options expiry. According to Greeks Live, a crypto derivatives provider, the options data is showing a bearish trend. Major term skews are indicating a negative outlook, with implied volatility on the rise. This suggests that market participants expect short-term negativity, even though there are some anticipated positive events on the horizon.

In addition to Bitcoin, there are also about 126,000 Ethereum options expiring this week, with a notional value of $304 million. Ethereum’s put/call ratio is 0.63, indicating a more balanced outlook compared to Bitcoin.

What to Expect

While this week’s options expiry might not be as impactful as some recent events, it’s worth noting that significant movements in Bitcoin’s price can occur around these times. As options expire, it could lead to increased volatility as traders and investors adjust their positions.

Bitcoin’s price action over the next few days could provide clues about the market’s direction. Former Bit MEX CEO Arthur Hayes has predicted a potential dip below $50,000 over the weekend, suggesting a bearish outlook. This forecast aligns with the broader trend of recent market declines, where high-cap altcoins and Bitcoin have both seen notable losses.

Conclusion

As we approach the expiry of Bitcoin options, the market remains on edge. While the immediate impact might be subdued compared to previous expirations, the potential for increased volatility and shifts in market sentiment remains. Traders and investors should stay alert for any sudden changes in Bitcoin’s price and overall market dynamics.