For this next week there are several events that we have to take into account, such as the expiration of the Bitcoin (BTC) options as well as the open interest in them, considering that these events influence the trends of this cryptocurrency. Also, volatility is expected to increase.
BTC options expiration
47% of Bitcoin options expire next Friday, which means that BTC could be on the verge of a trend-defining move. As for the open interest in them, it can be said that this is only 5% below its historical maximum, but almost half of this amount will expire in a few days.
It is notable that the current amount in options is close to US $ 2,000 million. This in a way indicates that the market is healthy, but it is still unusual to see such a strong focus on short-term options.
It should be noted that this is the same level that was achieved in the last two maturities. This number is expected to decrease after the next sale.
What other signals and indicators need to be monitored?
While keeping an eye on the BTC futures and options market is important, so is monitoring volatility. This measures the average premium paid in the options market.
This is why any sudden price change often makes market makers risk averse, demanding a higher premium for options trading.
To assess whether traders are paying large premiums for BTC options, it is necessary to analyze implied volatility. Any unexpected substantial price movement will cause the indicator to rise sharply, regardless of whether it is a positive or negative change.
Obviously the highest peak of volatility was in March on the day that Bitcoin contracted almost in half, on Black Thursday. However, its rapid recovery increased that level of volatility.
However, in recent days this volatility has decreased considerably, by around 13%. Although it is not an unusual level. This could be explained thanks to the unusually high correlation between BTC and US tech stocks especially in the last six months.
There may never be a reasonable explanation for why BTC options are so concentrated, but a similar phenomenon occurred in June that reduced the open interest in BTC options by $ 900 million.