In the crypto market, there has been a rapid surge in the price of Bitcoin these days. With the $5.8 billion in options contract about to expire, Bitcoin’s price has risen to new heights, with experts believing this may cause even further volatility in the market. The current price of Bitcoin as of today, September 27th, is an immense $65,445 with a market rise of 2.61% in the last 24 hours.
What is the Bitcoin option expiry?
To buy or sell a Bitcoin at a specific price, the holders require specific contracts that enable them to do so. These contracts are referred to as Bitcoin options. Note that these contracts have an expiration date set to them.
These Bitcoin options are mainly of 2 types. There is one that allows you to buy and there is one that allows us to sell, namely call options and put options respectively.
It was in the late 2010s, that Bitcoin options trading started to gain popularity, ‘cause it was at that time, the crypto market slowly started to grow. In 2022, when major exchanges like the Chicago Mercantile Exchange and Bakkt also introduced options trading for Bitcoin, which resulted in Bitcoin Options being a key component of the Bitcoin market, thereby affecting the market value of the coin as well as influencing the trading behavior of the users.
How to profit from Bitcoin options expiry?
Bitcoin options expiry is an important event if you are looking to earn some money. If you are trying your luck in the options expiry, there are some ways of doing so.
- Monitoring open interest and volume can help traders understand the market to a great extent and can enable them to make better trading decisions.
- The Put Call Ratio (PCR) is a tool in the stock market that is used to analyze the put options to call options traded, which helps in somewhat predicting the market trends.
- Hedging position is the practice of taking a position in one market to balance the risk associated with taking a position in an opposing market. It is done to reduce the risk of losses in investments.
- Exercising or closing positions means selling an asset at a predetermined strike price or selling an asset before the contract expiration date.
Risks of Bitcoin options trading near expiry
During options trading, traders must be extremely careful. There are various risks associated with options trading, some of them are:
- Increased market volatility. The cryptocurrency market is known for its unpredictability. Any sudden events in the market can turn the market upside down, especially during the final stage of options trading.
- Liquidity crisis. This occurs when a company or individual can no longer pay its bill on time. This is highly likely to occur during the options trading period.
- Mental pressure. This is one of the major problems faced in the options trading final stage. The pressure to make quick decisions can get to traders in the end, and there is a chance that they may suffer huge losses in the end for it.
To avoid these risks, traders need to be well-informed about the market as well as they should be able to keep a cool head and avoid making emotional decisions.
Bitcoin Current Market Analysis
The Bitcoin has made a significant growth in these past few days. The coin’s price has increased by 2.95% in the last week itself and is gradually increasing. But the coin is facing steady resistance in the market when it is in the $65k range. So currently this can result in 2 things.
- A breakout occurs and the price of the Bitcoin further skyrockets possibly even reaching $66,000
- The price of Bitcoin falls behind $65,000 and many holders will try to sell it at this stage, which will likely result in a selloff.
However, Bitcoin is not the only coin going through this phase. Various other coins like Solana and Avalanche are also in a similar phase.
Final Remarks
As we discussed earlier, the $5.8 billion in options contracts is about to expire. This is currently putting the market in disarray, where everything is unpredictable. This can result in mainly 2 things, either a coin gaining more value each day like in the case of Bitcoin now, or a coin suffering a dip. Both of these outcomes have an equal chance of happening. As of this moment, we can only wait and see if Bitcoin crosses the $66k mark or not. So Bitcoin holders should watch out for either a potential breakout or a correction.
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