A major Bitcoin [BTC] price volatility spike could occur by the month’s end as two major factors inherit play. The BTC options market nears a huge $750 Mln expiration and therefore the CME futures market’s open interest has also soared.
When an options expiry nears, holders of options contracts need to adjust their contracts before or right after the expiration. Often times, that would cause volatility within the price of Bitcoin.
Bitcoin Options Expiry, & CME Expiration Soon
It is difficult to measure the volatility coming from Bitcoin options until one to 2 days before the particular expiration. But, the upcoming expiration, which might occur on the last Friday of the month, coincides with other important dates.
In line with the CME Bitcoin futures calendar, the October derivative contract expires on 30th Oct. All CME monthly Bitcoin futures contracts expire on the last Friday of every month.
The upcoming expiry of CME Bitcoin futures contracts is especially important due to its high open interest.
As reported last week, the CME became the second-biggest Bitcoin futures exchange by open interest, overtaking Binance Futures, and other major exchanges.
Since CME tailors to accredited investors and institutions, the CME Bitcoin futures exchange surpassing major cryptocurrency exchanges carries various significance. Most notably, it indicates that the demand for BTC from institutions has never been this high before.
The term open interest refers to the entire amount of long and short contracts open within the market. Hence, if open interest is high nearing expiration, it could trigger large volatility.
Atop the highly-anticipated options and futures expirations, Bitcoin also looks ahead at a crucial monthly close.
Earlier today on 26th Oct., upon its weekly candle close, Bitcoin officially marked its first completed weekly candle above $13k since January 2018.
If BTC maintains to stay above $13k into November, it might confirm its first monthly candle close above $13k in nearly three years.
Researchers from Skew added that the “organic” nature of the continued Bitcoin rally might raise the probabilities for a protracted uptrend. As reported earlier, Bitcoin options are pricing within a 7% chance of BTC hitting $20K within the upcoming two months.