Crypto prices are expected to fluctuate next week, with approximately $3 billion worth of Bitcoin options and $1.8 billion worth of Ethereum options expiring on September 29. This date is particularly notable because it is the end of both the month and the quarter. Here are the details…
Critical date for Bitcoin and altcoins has been announced
Deribit Chief Commercial Officer Luuk Strijers underlined the similarities between the cryptocurrency market and traditional finance, noting that options are approaching their expiration dates, especially quarterly expirations, which “can result in large transaction volumes and fluctuations.” The Bitcoin Volatility Index, which tracks Bitcoin options traders’ view of volatility over the next 30 days, has been trending upwards over the past month while hovering near all-time lows, according to The Block’s Data Dashboard.
“The actions of market makers can lead to increased volatility in the market, especially in the period leading up to options expiration,” Strijers told The Block. Additionally, “Market makers adjust their hedges based on changes in the price of the underlying asset.” he added. While Strijers stated that the impact of monthly and quarterly expirations in September on the price will be greater than daily or weekly expirations, he said that current conditions may not lead to particularly strong market movements. Bitcoin’s price was mostly flat on Friday, rising 0.1% to $26,544, according to CoinGecko. The world’s largest cryptocurrency by market value was flat last month, down 0.4%.
Influence of corporate players
Institutional participants using the Deribit derivatives exchange typically exhibit sophisticated strategies around option maturities, Strijers said, explaining that participants “aim to manage volatility and delta hedge their exposure.” This leads to these institutional investors “frequently adjusting their hedging positions, potentially affecting Bitcoin prices and market volatility.” Options are derivative contracts that give the buyer the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a certain maturity date. Call options give the privilege to buy, while put options give the right to sell.
Traders use options for a variety of purposes, from hedging positions in the spot or futures market against adverse price movements to speculating about future trends in valuations and volatility.
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