In a tweet on Monday, cryptographic data provider Skew reported that 102,200 Bitcoin (BTC) options will expire on Friday.
Option contracts allow holders to buy or sell Bitcoin at a specific price, which is known as the strike price. Friday’s expiration has notable clusters around the $ 15,000 strike price and the $ 20,000 strike, according to Skew.
The expiration date of Bitcoin option contracts is widely considered a volatile event for the pilot cryptocurrency, because as the expiration approaches, holders adjust their contracts. Profitable traders can also decide to receive payment and give up cryptocurrency.
It is known that such events cause large fluctuations in the value of Bitcoin. Usually, the impact of a contract on the BTC price becomes more obvious about a day or two before it expires.
Cryptographic derivatives trading has increased this year, as more traders and institutional investors seek additional exposure to Bitcoin. Last week, the cryptocurrency derivative platform Deribit began offering Bitcoin futures with a strike price of $ 100,000 expiring on September 24, 2021. In other words, Bitcoin enthusiasts who believe the cryptocurrency will reach a six-digit monthly figure can now bet on the futures market.
Bitcoin is currently in the middle of a bull market that is partially fueled by institutional investors and large over-the-counter transactions. Even with anticipated futures volatility, there is a good chance that Bitcoin will remain well supported by institutional demand and the growth of so-called illiquid wallets – that is, addresses that have sent less than 25% of the BTC they have ever received. The chain analysis considers that illiquid wallets hold 77% of the 14.8 million mined BTCs that were not lost.
About $ 2.3 billion of Bitcoin futures will expire on Christmas Day, setting the stage for a volatile week in the cryptocurrency market.