- Options representing $16 billion worth of Bitcoin are expiring.
- The event could pave the way for a market recovery.
- Bitcoin is down 6% over the past week.
A record number of Bitcoin bets are set to expire today as the top crypto flounders amid a 6% decline over the past week.
Bets on Deribit, the largest crypto options exchange, represent a whopping $16 billion worth of Bitcoin, the largest amount to date this year.
The event may signal an end to the market rout, according to Jean-David Péquignot, chief commercial officer at Deribit.
“With October’s bullish seasonality approaching, this reset could pave the way for a V-shaped recovery,” he told DL News in a statement.
All eyes on October
September has been a rough month for crypto.
Last week, the US Federal Reserve slashed interest rates by 0.25%, which was widely viewed as bullish for riskier assets, such as stocks and crypto.
While Bitcoin initially rallied on the news, the excitement quickly faded as Fed Chair Jerome Powell signalled earlier this week that the US central bank will move more slowly on future rate cuts than previously anticipated.
All the while, large holders have been selling en masse, cashing out $16 billion worth of Bitcoin since August.
October has historically been a much better month for Bitcoin.
This so-called seasonality is what Péquignot said could spur the top crypto to higher prices next month.
Range-bound or rebound?
The bets come in the form of options, derivatives that let traders speculate on the future price of a given asset. Options expire at a predetermined date, and often cluster on the last Friday of a given month.
When lots of options expire at the same time, it can lead to volatility and give clues about how traders view the market.
The recent options flows signal range-bound expectations, Jake Ostrovskis, head of OTC trading at Wintermute, a crypto market maker, told DL News in a statement.
In other words, investors are betting that Bitcoin won’t be moving too much in the short term.
Ethereum pinned
It’s not just Bitcoin that’s tied down.
According to Ostrovskis, options positioning shows demand for Ethereum, the second-largest crypto asset, in the $3,900 to $4,100 price range.
Near-term upswings could also be capped as traders look to sell Ethereum between $4,300 and $5,000, he said.
Still, this positioning could change quickly.
Péquignot noted that trading volumes have been muted, despite the record number of options expiring. He also said macroeconomic events, such as the coming publication of US financial data, could give clues as to where the market is heading.
“Lower volumes suggest caution,” he said. “A surge in inflows or funding rates could signal a rebound.”
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
