Bitcoin (BTC) is experiencing a remarkable resurgence, surpassing the $65,000 milestone, a level not seen since early August. This surge comes ahead of a critical $8 billion Bitcoin options expiry set for Friday, which analysts predict could lead to high volatility. Currently trading at $65,425, Bitcoin has gained 3% in the last 24 hours, according to CoinMarketCap. This marks a strong recovery from its early September dip when BTC dropped as low as $53,000.
While the upcoming options expiry is significant, it’s not entirely unprecedented. The largest options expiry event occurred earlier this year, with $14 billion in contracts expiring before Bitcoin’s April halving event. However, Friday’s event ranks as the second-largest on record, particularly for Deribit, the world’s largest cryptocurrency options exchange, which accounts for $5.8 billion of the expiring options.
According to Luuk Strijers, CEO of Deribit, around 20% of these contracts are currently "in the money." However, the distribution is uneven, with 28% of call options and just 9% of put options considered profitable as of Wednesday. This imbalance suggests a potentially sharp movement in Bitcoin’s price, as traders either capitalize on gains or hedge against losses.
In addition to the options expiry, market participants are closely monitoring the upcoming Personal Consumption Expenditures (PCE) report from the U.S. Bureau of Labor Statistics, also scheduled for Friday. The PCE report, which tracks the prices of everyday goods, is a key indicator of inflation. According to estimates from FactSet, the report is expected to show a modest 0.1% month-over-month increase and a 2.7% rise year-over-year.
This combination of macroeconomic data and major cryptocurrency market events is contributing to increased speculation and volatility. Bitcoin’s recent surge also coincides with broader market trends following the Federal Reserve’s decision to cut interest rates last week. The move has boosted not only Bitcoin but also other digital assets and U.S. equities, as investors rekindle their appetite for riskier assets.
With such a significant options expiry looming and market conditions becoming increasingly complex, traders and investors alike are bracing for a potentially volatile close to the week. Whether Bitcoin will push past its recent highs or retrace depends on a mix of market sentiment, economic data, and how these options contracts play out. As always, traders should exercise caution and stay updated on developments as they unfold.
In conclusion, Bitcoin’s $8 billion options expiry, combined with key macroeconomic indicators, is setting the stage for a highly volatile week.