Bitcoin Options Expiry Sets Record, Analysts Expect Delayed Volatility

Analysts expect volatility to arise from the $18 billion notional expiry of Bitcoin options, which may be delayed. Historically, large expiries suppress volatility leading into the cut-off and result in a clearer directional move afterwards. Traders are betting on lower prices over the weekend, and the options market still has high levels of risk, with $78.9 billion worth of open interest in Bitcoin contracts.

Crypto markets are bracing for potential volatility as analysts anticipate a significant $18 billion notional expiry of Bitcoin options, which may be delayed. Historically, large expiries have suppressed volatility leading into the cut-off, often resulting in a clearer directional move afterwards. Traders are currently betting on lower prices over the weekend, and the options market still exhibits high levels of risk, with $78.9 billion worth of open interest in Bitcoin contracts Bitcoin Price Prediction: Google Buys Into Bitcoin Mining in $3 Billion Deal – Wall Street is Coming Fast^[2].

The upcoming expiry is expected to have a substantial impact on the crypto market. Analysts have warned that the expiration of $18 billion worth of options could lead to increased volatility and uncertainty, as large notional positions force dealers and traders to adjust their hedges around key price levels. This could potentially accelerate moves in either direction, depending on the underlying market sentiment and macroeconomic factors.

Additionally, the options market remains highly speculative, with a significant amount of open interest. This high level of risk is a reflection of the current market conditions, which have been characterized by a mix of bullish and bearish sentiments. The recent market downturn, which saw crypto lose $400 billion in market value from September 18 to 26, has added to the overall uncertainty Crypto sheds $400 billion in a week as Uptober nears — “worst case is $50K BTC”^[1].

Despite the potential for volatility, some analysts remain optimistic about the long-term prospects of Bitcoin. They argue that the recent market correction is a normal part of the crypto cycle and that the underlying fundamentals remain strong. However, they also caution that the market remains overheated and vulnerable to shocks from macro or policy shifts.

As the Bitcoin options expiry approaches, investors and traders should remain vigilant and prepared for potential market movements. It is crucial to stay informed about the latest developments and to manage risk appropriately. The upcoming expiry presents an opportunity for both profit and loss, and traders should approach the situation with a well-thought-out strategy.