Options Expiring Could Drive Bitcoin Towards $31,000

1:32 am
June 30, 2023
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The price of Bitcoin has managed to remain above $30,400 despite selling pressure in the cryptocurrency sector. Bitcoin is currently trading at $30,458 with sideways movement in the last 24 hours. However, analysts predict that the upcoming expiration of options contracts, totaling $5 billion in Bitcoin, could potentially push the price of Bitcoin above $31,000.

According to data from crypto options platform Deribit, a significant number of options contracts are set to expire on Friday, January 29. Option holders will have the opportunity to exercise their right or obligation to buy or sell Bitcoin at a specific price, depending on their contract. Analysts suggest that this expiration date could result in a spike in buying pressure as major option players hedge their positions, potentially causing the price of Bitcoin to surge.

Analyst Tom Dunleavy highlighted the potential impact of the options expiration in a tweet, stating, “If these are rolled into more calls we should see spot buying from dealers to hedge their books; puts opposite story. Either way expect some volatility.”

The recent rally in Bitcoin has been attributed to a “hunger for positive news” and a rebalancing of internal liquidity within the sector. While there is still a liquidity issue that could limit the rally, experts believe there is a relatively small probability of the price falling below $28,000 and a potential for a rebound to $35,000 and above.

Summary:

The expiration of options contracts, totaling $5 billion in Bitcoin, could potentially lead to an increase in buying pressure and push the price of Bitcoin above $31,000. Analysts predict volatility in the crypto market as major option players hedge their positions. The recent rally in Bitcoin has been driven by positive news and a rebalancing of internal liquidity within the sector.

FAQ:

What are options contracts?

Options contracts give holders the right (but not the obligation) to buy or sell an asset at a specific price within a specified timeframe.

What is the significance of options contracts expiring?

When options contracts expire, option holders have the opportunity to exercise their right or obligation to buy or sell the underlying asset. This can result in increased buying or selling pressure depending on the market conditions.

How does options expiration affect the price of Bitcoin?

Depending on the actions of option holders, options expiration can lead to increased volatility and potentially impact the price of Bitcoin. If option holders choose to roll over their contracts or exercise their options, it can create significant buying or selling pressure in the market.

What factors have influenced the recent rally in Bitcoin?

The recent rally in Bitcoin has been driven by a “hunger for positive news” and a rebalancing of internal liquidity within the cryptocurrency sector. Investors have shown increased interest in Bitcoin, leading to the transfer of funds from other cryptocurrencies.

What is the outlook for Bitcoin’s price after the expiration of options contracts?

While there is still a liquidity issue that could limit the rally, experts believe there is a relatively small probability of the price falling below $28,000. There is potential for a rebound to $35,000 and above, although volatility is expected in the short term.


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