Record Expiry of Bitcoin Options Indicates Possible Market Fluctuations

Today's expiration of Bitcoin options with a nominal value of $18 billion is considered record-breaking by analysts. Although the expected volatility may occur with a delay, it could provide some relief for crypto investors who have experienced a challenging trading week. While Bitcoin shows a slight gain in September, most of the crypto market is already down. Bitfinex analysts told Decrypt that large expiration dates tend to suppress volatility beforehand and then trigger clearer directional movements in the following 24 to 72 hours. On the prediction market platform Myriad, which belongs to Decrypt's parent company Dastan, users mostly expect falling Bitcoin prices in the coming days. At the time of the report, the bears were slightly ahead with 51% compared to the bulls with 49%. Options are derivatives that give traders the right, but not the obligation, to buy or sell Bitcoin at a predetermined price. These contracts usually expire on the last Friday of a month. When the nominal value of such options reaches the double-digit billion range, as is currently the case, it can lead to market volatility as traders quickly adjust their risk positions. Regarding October, Bitfinex analysts estimate that substantial risk remains in the options market. The crypto data aggregator Coinglass currently puts the open interest in Bitcoin contracts at $78.9 billion. At Deribit, the most significant platform for Bitcoin options, which was recently acquired by Coinbase, open interest of over $8 billion is set to expire on October 31. Bitfinex analysts also noted a significant concentration of October options positions in the price range of $115,000 to $125,000, indicating "long convexity" in the market. Traders who have acquired such long contracts would benefit significantly from a strong price increase. The sellers of these options, on the other hand, might be forced to hedge aggressively, which could amplify short-term market fluctuations. If this happens, it could suppress the market's upward movement until external factors disrupt the market structure.