Bitcoin Is Braced For A Huge $6 Billion Price Earthquake This Week

Bitcoin has climbed through March after its huge early 2021 rally came off the boil in February. The bitcoin price has returned to near its all-time high of just over $60,000 per bitcoin, settling just under the psychological level. Now, with bitcoin traders and investors searching for signs of what might move the market, a record near-$6 billion worth of bitcoin options are set to expire this Friday, March 26. Bitcoin options contracts—allowing investors to buy or sell the cryptocurrency at a specified price within a set time period—worth around 100,000 bitcoin, or almost $6 billion at today's prices, will expire on Friday, according to data from cryptocurrency analytics provider Bybt. This coming options expiry is significantly more than the previous $4 billion record, set in late January."The expiry data suggests a bullish outlook," says Pankaj Balani, the chief executive of the Singapore-based Delta bitcoin and cryptocurrency exchange, speaking over the phone. Trading data shows that speculators are feeling upbeat about bitcoin ahead of the record 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)."There is a higher open interest build up on puts than on calls, as options writers remain more comfortable selling the downside than writing the upside," says Balani. "On the downside, the highest buildup is on $40,000 strike puts for the March expiry. $40,000 also remains the most sold strike for the June expiry and for longer maturities."Elon Musk, the Tesla TSLA billionaire and outspoken bitcoin supporter, set the bitcoin market alight when he added $1.5 billion worth of bitcoin to his electric car company's balance sheet last month—buying at a price of around $40,000 per bitcoin."$40,000 has become a strong psychological level for traders, as this is the level at which bitcoin took a big leg up post the news of Elon Musk's $1.5 billion buying," says Balani. "Though a lot of this open interest has rolled over; a significant size is still open with only one week left for expiry. This opens a slight volatility risk for the market. If the premium on futures shrinks then we can see unwinding of the carry trade which can increase short term volatility for bitcoin into the expiry."Bitcoin's looming record options expiry could spark a bout of price volatility, as previous large expiries have caught investor attention. The size of the bitcoin open interest market has also soared recently, more than doubling since since last summer. The recent bitcoin price boom, which has seen it double since the beginning of 2021, has been put down to rising Wall Street institutional adoption, corporate interest led by Tesla and MicroStrategy MSTR , and a wave of retail traders keen not to miss out of the rally.


All data is taken from the source: http://forbes.com
Article Link: https://www.forbes.com/sites/billybambrough/2021/03/22/bitcoin-is-braced-for-a-huge-61-billion-price-earthquake-this-week/


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