Market makers in ‘fear mode’ ahead of Friday’s $575M Bitcoin options expiry

Market makers in ‘fear mode’ ahead of Friday’s $575M Bitcoin options expiry 1
Market makers in ‘fear mode’ ahead of Friday’s $575M Bitcoin options expiry 2

The options market in the cryptocurrency Bitcoin is still a relatively small ecosystem, but there are many players trying to make it bigger. With the options market now bigger than the spot Bitcoin price, it has become the most important market for traders.

The excitement surrounding bitcoin’s recent price run-up has sparked a spate of sell-side activity. In anticipation that the market will soon begin its decline, a number of traders have been shorting the cryptocurrency in an attempt to generate a profit before bitcoin’s price rally has run its course.

Bitcoin options are expiring this week, and traders are worried about whether the highest-profile digital currency will bounce back after several weeks of sideways trading.. Read more about bitcoin plummet and let us know what you think.On the fourth. In June, 15,530 Bitcoin (BTC) options expire, representing $575 million in open interest. Currently, the bulls are still heavily influenced by the 37% correction in the price of BTC in May, which has put most calls underwater. Despite the decline, active supply of bitcoin has hit a five-month low, with 45% of the coins unchanged over the past two years. This indicator shows that investors who bought before the 2019 bull trend are not willing to sell at current prices. Mining companies are also shunning sales below $40,000, as their exits recently hit a seven-month low compared to historical averages. Meanwhile, technical analysts pointed to the 50-week exponential moving average as a solid support level near $34,000. However, a sideways trading pattern is forming on the price chart, ending in a tapering chamfer and breakout – called a contraction – indicating more volatility towards the end of the week. What is clear is that the market is very mixed right now and everyone is looking for different signals to determine the direction of the next trend movement.

Bears may dominate if markets decline

While the bears undoubtedly dominated Friday’s expiration, it looks like they have gotten bolder and are focusing on puts (selling) below $32,000. Total open interest in bitcoin options. Source: Bybt word-image-375 The initial picture is in favor of the bears, as the ratio of calls versus puts is 0.84, although this indicator rates each option equally. But the right to buy bitcoins at $46,000 in less than 42 hours is currently worthless, so this call option is trading below $20 each. The same effect applies to downside-neutral put options at $28,000 or less. Holders have no advantage in keeping them with them for the next few weeks, as these contracts have also become worthless. So to better assess the traders’ position until Friday’s option expiration, we need to focus on the $32,000 to $42,000 range. Neutral bull calls to $42,000 total 3,080 bitcoin contracts, accounting for $114 million in open interest. On the other hand, put options up to $32,000 cover 4,680 bitcoin contracts with a current value of $173 million. As expected, the $60 million difference in the Bears’ favor isn’t enough to cause an upset. This was caused by overly bearish bets that didn’t pan out, possibly leading to the first balanced decline in options in three weeks.

Market makers have a downward trend

The 25% delta skew provides a reliable and immediate analysis of fear and greed. This indicator compares similar call (long) and put (short) options side by side and becomes positive when the premium of the put options with neutral or bearish risk is higher than that of the call options with similar risk. This is generally considered a fear scenario, although it often occurs after a strong rally. In contrast, a negative skew implies higher hedging costs and indicates a bullish bias. bitcoin 30 day options 25% delta skew. Source : word-image-376 Since the 17th. In May, the indicator moved into fearful territory and repeatedly peaked at 20%, indicating a lack of interest in offering protective puts. There is no doubt that the bulls are scared, but historically these are the best opportunities to buy lows. At least before the option expires on the 4th. In June, the bears no longer dominate the trade. Huobi, OKEx and Deribit will be on the June 4 list at 8:00 GMT. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.The Bitcoin market has a big expiry coming up this week: Friday at 5pm EST the CBOE’s Bitcoin (USD) Futures will expire, marking the end of a three-month period that has seen the cryptocurrency’s price rocketing from around $1,000 to almost $20,000.. Read more about coinmarketcap and let us know what you think.

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