Bitcoin, the leading cryptocurrency, failed to maintain its gains following the FED decision and retreated back to the critical $80,000 level. While it remains to be seen whether BTC will experience further declines, attention in the cryptocurrency market has turned to high-volume option contracts expiring tomorrow.
These options are particularly significant because they fall on the last Friday of both the week and the month.
According to weekly data, approximately $11 billion worth of Bitcoin options will expire on the Deribit derivatives exchange on October 30th.
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According to Bloomberg, Bitcoin investors are preparing for potentially sharper price fluctuations this week as $11 billion worth of options expire and the US midterm elections, just days before the election, could add further uncertainty to the crypto markets.
At this point, contracts expiring on October 30th represent approximately one-third of all open Bitcoin options on Deribit.
The report stated that most of the expiring contracts were bet on prices that seemed difficult to reach in the near future. It noted that Bitcoin call options outnumbered put options, with significant concentrations at the $90,000, $95,000, and $100,000 levels. Conversely, put options were prominent at strike prices below $80,000.
If the current price is maintained at this point, these call options are likely to become worthless at expiration. Instead, the market is focused on options closer to the spot price and the associated hedging.
The $75,000-$82,000 Range is Critical for Bitcoin!
Adam Haeems, head of asset management at Tesseract Group, told Bloomberg that approximately 70% of the gamma value in expiring options is concentrated in the $75,000 to $82,000 range.
Haeems noted that if market makers are short, hedging sales could increase during price declines. According to Haeems, in this scenario, Bitcoin could fall to the $75,000-$78,000 range, and losses could deepen. This is because below $80,000, put options are more than twice as numerous as call options.
US Midterm Elections Could Also Affect Bitcoin Price!
According to analysts, another development increasing the risk of volatility in Bitcoin is the US midterm elections on November 3rd. Speaking to Bloomberg, Caroline Mauron, co-founder of Orbit Markets, stated that some options traders may slow the supply of new contracts until the election results are clear. This could lead to a decrease in transactions that limit price fluctuations and result in higher volatility.
In this context, according to the Bloomberg Markets Pulse survey, the average year-end Bitcoin price forecast is $90,800 if Republicans retain control of both the Senate and the House of Representatives, $76,450 if Democrats take both houses, and $84,100 if the two parties share control.
*This is not investment advice.