50% of Bitcoin CME Open Interest is Set to Expire Friday; What This Could Mean

Bitcoin has seen some rather lackluster price action in recent times. Following its latest rejection at $10,000, the cryptocurrency has found itself caught within a downtrend that has guided it to the upper-$8,000 region.

Although this decline has led the crypto to shed over $1,000 from its recent highs, its downwards velocity has still been rather tempered, with buyers working hard to cement $8,800 as a strong support region.

This support may not last for too much longer, as the expiration of contracts on the CME could spark volatility due to traders rolling over these positions.

Half of Bitcoin Open Interest on the CME is About to Expire 

The CME’s Bitcoin products have seen massive growth in recent times, with total open interest on the platform just recently setting fresh all-time highs.

Traders have been heavily utilizing both their BTC options and futures, and the popularity of these products is clearly seen while looking towards their open interest.

Bitcoin CME futures currently have about $420 million in outstanding open interest, marking a slight decline from recently set all-time highs of $532 million.

Data via Skew

Options on the platform have also seen growth, with open interest rocketing from roughly $20 million throughout the first few months of 2020 to highs set last week of $174 million.

Data via Skew

Now, 50% of open interest for both futures and options on the platform is expiring.

“23k Bitcoin equivalent futures and 10k Bitcoin options are set to expire this Friday on CME. Approx 50% of open interest for each product. Watch the rolls,” data platform Skew noted.

Could This Spark Volatility?

Traders utilizing both contracts and futures frequently “roll over” their contracts from the month they are set to expire to future months.

This allows them to maintain their same position despite the original contract expiring, and is done by selling the front-month contract to buy one with a later expiration.

The rapid selling of these contracts could have implications for Bitcoin’s price action, although it is important to note that the CME’s total share of the crypto market still remains rather small.

As such, the shifting in options positions amongst traders on the platform that will be seen prior to Friday may only have tempered effects on the market.

Featured image from Shutterstock.
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