Bitcoin is falling as the market waits for options contracts to expire

Bitcoin is trading at $26,100 on Monday morning (25) and is trading down 2%, as the market follows the expiration of approximately R$24 billion of quarterly options contracts for the market’s two largest cryptocurrencies, BTC and ETH. Deribit.

Of this number, R$9.5 billion is in calls (bought positions) and another R$5.5 billion in Bitcoin puts (sold positions). Ethereum has R$5.9 billion in calls and R$2.7 billion in puts.

Although it is under pressure in the short term, investors have plenty of reasons to believe in Bitcoin’s renewed surge in the long term. Both halving and spot ETFs in the US remain the main reasons.

The market follows the Bitcoin and Ethereum derivatives market

The months of September are generally terrible for Bitcoin. In the last 10 periods, 8 of them showed losses. With just a few days left until the end of the month, BTC contradicts this statistic, but its gains are only 0.77%.

One of the reasons that may put pressure on Bitcoin is the expiration of R$15 billion of options on Deribit this Friday (29). As shown in the chart below, this day has more open contracts than the others.

Bitcoin Open Interest on Deribit.
Bitcoin Open Interest on Deribit.

In conversation with CoinDesk, Luuk Strijers, commercial director at Deribit, explains that this is common, as these are quarterly maturities. The figures follow the passage of the first two quarters of the year.

“Quarterly maturities tend to be the most important in terms of volume and value.”

“For example, last June saw maturities totaling $5.4 billion, while March recorded $5.2 billion.”said the director. “The current quarter is consistent with previous quarters in 2023.”

Strijers continues his explanation and thinks that we will not see much volatility in the coming weeks. The reason would be to monitor the futures market with the spot market.

Therefore, despite the US Central Bank meeting, hacks worth millions of dollars at brokers and casinos and a terrible track record in recent times, Bitcoin could be about to end September without any major changes in the price.

The increasing Bitcoin dominance is a bullish sign

On his blog, Deribit points out that Bitcoin’s dominance reached 50%, while other cryptocurrencies lost steam. According to the broker, this could be a sign that a rally is coming for BTC.

“Bitcoin’s market dominance has increased, from 49.2% to a remarkable 50%. Typically, a broad decline in altcoins is correlated with neutral to bullish sentiment toward Bitcoin.”

In the long term, the text points to this “several bullish catalysts” can be seen. Bitcoin spot ETFs, halving and greater regulatory clarity are cited as examples.

On the other hand, the possible sales of billions of BTC by the US government and former Mt.Gox users are worrying the market. That’s why Deribit expects that “These factors keep the price of BTC within known limits”.

Source: Live Coins