On Friday, March 26th, 2021, a record-breaking $6 billion worth of bitcoin options contracts expired. This comes just after the previous record of $4 billion worth of options contracts that expired in January. That's a big deal in the world of Bitcoin, cryptocurrency, and investing overall.
What happens next in the derivatives market within the upcoming months will dictate the price trend of world's most popular cryptocurrency. It will also impact the prices of dozens of other cryptocurrencies worldwide. It truly is exciting times for Bitcoin, crypto, and options trading. So what does it all mean for Bitcoin investors? And what predictions have been made by experts on BTC price and the crypto market overall?
The Expert Analysis In Hindsight
There was a lot of buzz in the world of cryptocurrency trading for the past few weeks surrounding the record-breaking $6 billion expiration of bitcoin contracts. Experts from all over the world were speculating and making predictions on what might happen. Much of it could be read on cryptocurrency news websites like https://bitcoin-trading.io/.
Before Friday, Pankaj Balani – the chief executive officer of Delta Exchange, gave a data-based prediction that there was a bullish outlook. Speculators going into Friday felt positive about bitcoin moving forward as there is more interest in call options than put options being placed. This was an indication that people are betting on the bitcoin price being more likely to rise than fall.
In fact, traders were selling put options much more aggressively in this expiry than any other. If for any reason, the market started to fall, these put options would have been squared off. This would have resulted in added bullish pressure around Bitcoin.
Many experts were also warning investors to brace themselves for the max pain plunge of $44 000. But as it turns out, max pain was never on the cards for the dominant cryptocurrency. Instead, prices have been steadily climbing for Bitcoin since Friday. Volatility is also slowly stabilizing as the uptick of 4.8% saw the 12-year-old digital asset regain its losses caused by the uncertainty of the past few days.
Predictions In The Wake Of The Aftermath
Over the past ten years, statistics have suggested April has always been bullish for Bitcoin, so it appears this April will be no exception. Historical data has also shown the price of Bitcoin to rally following a pullback from an end-of-month expiry. Some traders may be worried that bitcoin prices could be pressured by future traders hoping for a rollover in their positions into April and May.
Head of Valkyrie Funds Sean Rooney believes that the upward momentum of Bitcoin prices could be limited, and that bitcoin is approaching an extreme overbought level. Cryptocurrency strategist at LMAX Digital Joel Kruger also agrees. Analyzing the relative strength index (RSI), he concluded that the market will have limited upside with risk for correction and consolidation.
In general, close monitoring of derivatives indicators is the best way to assess whale and arbitrage desk influence on the BTC market.
● In analyzing the 25% delta skew for the past five weeks, the skew indicator remained flat. This is a clear indication of indifference from whales and option market makers. The neutral value of the skew indicator implies a balanced risk assessment for Bitcoin.
● It can be gauged that futures premium remain bullish from measuring the current expense gap between futures and the regular spot market.
● Monitoring the perpetual futures funding rate, it can be deduced that retail traders are not behind the basis for high futures. Currently, it is averaging at 0.04%, which is relatively neutral. Retail traders are not forming an arbitrage opportunity, and thus, fixed-calendar futures will be trading at a premium.
Overall, all derivatives indicators are pointing towards healthy growth and recovery of stability for bitcoin. Traders should not be rattled by the 16% decrease from the all-time high of BTC that was $61,800 on March 13th.
Crypto Conclusion
The hype around the $6 billion expiry in the bitcoin options market was sorely misplaced. As it appears that aside from a couple of days of volatility, bitcoin prices have already shown signs of bouncing back as we witness a continual steady increase. Any drop in value caused by the expiry is most likely temporary. Investors that rode out the short-term volatility and trusted in their positions in Bitcoins will have come out on top. Undoubtedly, this is an indication that bitcoin is a sustainable investment for cryptocurrency retail investors and major financial institutions adding crypto to their portfolios for the first time.
Trust in the cryptocurrency has been further solidified not just by surviving this recent expiry, but also by investments from mainstream companies. Most notably, corporations such as Tesla and MicroStrategy have pushed the legitimacy of cryptocurrency to new heights into 2022 before the crypto crash. The two behemoths of the industry moved institutional balance sheets into bitcoin in a bid to hedge against inflation. Due to this move by Tesla, customers are now able to buy Tesla cars for bitcoin. Speaking of Elon Musk companies supporting crypto, PayPal now allows payments to be made or received with cryptocurrencies. We may very well see other corporations soon follow suit in their support of BTC as payment options.
