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60% of Bitcoin Options Open Interest Expires in 6 Days; Will Fireworks Ensue?

Cole Petersen

Cole Petersen | Jun 20, 2020 | 16:00

Bitcoin

60% of Bitcoin Options Open Interest Expires in 6 Days; Will Fireworks Ensue?

Cole Petersen

Cole Petersen | Jun 20, 2020 | 16:00


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  • The crypto market has continued extending its long-held consolidation phase, with this sideways trading largely coming about as a result of Bitcoin’s lack of momentum
  • Analysts are now noting that it may persist further in the near-term, as there are no immediate catalysts for momentum
  • One factor that could lend itself towards shifting this trend is the expiry of 60% of all Bitcoin options next week
  • Close to $1 billion in contracts are expiring on June 26th, and options traders with influence over the market may be incentivized to spark a trend in one direction or another
  • That being said, compared to the margin and futures market, options still comprise only a small percentage of the crypto’s total outstanding open interest.

Bitcoin and the aggregated cryptocurrency market have once again extended their long-held bout of sideways trading. BTC did experience some slight volatility overnight when it rallied to $9,400 before being pushed down to lows of $9,100.

From this point, it has recovered most of these losses, but buyers do seem to be growing increasingly weak as it continues ranging sideways.

The expiration of over $1 billion worth of Bitcoin options contracts could be a catalyst for imminent volatility, however one research firm is questioning just how impactful this event will be on the market.

Bitcoin’s Consolidation Persists, but This Could Soon Come to an End 

At the time of writing, Bitcoin is trading down just over 1% at its current price of $9,290. This marks a slight decline from daily highs of nearly $9,500. It also marks a rebound from recent lows of $9,100.

Over the past several days, it has been stable around $9,400. The overnight decline that led it down to its current levels seems to point towards some underlying weakness amongst buyers.

Its consolidation range is still intact as long as buyers are able to maintain its price above the upper-$8,000 region.

The imminent expiration of Bitcoin’s monthly and quarterly options contracts on June 26th is one event that could trigger a trend-defining movement.

Arcane Research spoke about this in a recent report, saying:

“Close to $1 billion bitcoin options contracts will expire on Jun 26, accounting for 60% of the total open interest in the BTC options market. In situations like this, there could be significant financial incentives to move the spot price towards a certain level before the expire date.”

Bitcoin

Image Courtesy of Arcane Research

The Options Market Still Remains Small, Signaling That it May Lack Influence

It is important to keep in mind that Bitcoin’s options volume only accounts for 1% of that seen by BTC futures and spot trading.

That being said, Arcane Research believes that the event may not have any meaningful impact on the market.

“A price move going into the expiry next week will then likely be driven by the spot or futures market, and not changes in the open interest in the options market.”

Featured image from Shutterstock.

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