Bitcoin Breaks $65,000 Ahead of Options Expiration, Raising Concerns About Market VolatilityBitcoin has surged past $65,000 for the first time in four weeks, leading to concerns about the upcoming options expiration on Friday, when over $5.8 billion worth of contracts are set to expire
Bitcoin Breaks $65,000 Ahead of Options Expiration, Raising Concerns About Market Volatility
Bitcoin has surged past $65,000 for the first time in four weeks, leading to concerns about the upcoming options expiration on Friday, when over $5.8 billion worth of contracts are set to expire. Some analysts believe the options expiry could lead to heightened volatility in the cryptocurrency market.
Chris Newhouse, Head of Research at Cumberland Labs, says a break below this price level could trigger a sharp decline, while sustained breakout could see a bounce. Bitcoin sits at $65,000 and is slowly testing the higher prices, either breakout and stay there or break down and a significant drop. We have shifted to a more micro-structure driven trading environment where liquidations, funding rates, and speculation on volatility are the major drivers of price, Newhouse said.
Bitcoin rose as much as 3.7% to $65,826 on Thursday, its highest level since July 30, before giving up most of its gains. Smaller, less liquid tokens saw even larger gains, with Dogecoin rising more than 9%, Solana up 5%, and Avalanche climbing 6.5%.
Newhouse said historically, the $65,000 level has been a resistance point for Bitcoin in August and September. Were re-testing it.
In the options market, traders are facing over $5.8 billion in contracts set to expire on Friday. Roughly 20% of expiring Bitcoin options are in the money. This large-scale options expiry could exacerbate market volatility or activity as traders roll over or unwind positions, which may also impact price, said Luuk Strijers, CEO of cryptocurrency derivatives exchange Deribit.
According to data compiled by Deribit, open interest for Bitcoin options is concentrated around $100,000, $90,000, $70,000, and $65,000 across all expiring contracts.
The market should see some volatility going into expiry due to gamma hedging keeping the market pinned around $60,000 and $65,000, said Darius Tabai, CEO and Co-founder of Vertex.
As investors flock to the options market, traders offering these contracts either buy or sell aggressively to offset their rapidly changing exposure a dynamic known as gamma hedging.
The impact of the options expiration on Bitcoin price remains uncertain. While some analysts believe the options expiry could lead to increased volatility, others suggest the market could see volatility prior to the expiry. Regardless of the outcome, the options expiration is likely to have a significant impact on the Bitcoin price.
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