Bitcoin Falls to 3-Week Low – Will Expiration of $22B Options Help?

Takeaways from the conference:

• Market sentiment is unclear as traders reduce bullish position, indicating a mixed mood ahead of this Friday’s expiration date for Bitcoin monthly option contracts worth $22 Billion.

• The Bitcoin ETF and Stablecoin Premiums are indicators of cautious optimism. It suggests that traders could be seeking gains near-term.

BitcoinBTC( ) fell to its lowest levels in more than three weeks, leading to the liquidation of $275 millions in leveraged bullish trades. Investors have begun to wonder if the imminent recession will affect their trading. $22 billion BTC options expiry On Friday, explain the drop below $109,000. If professional investors expect further price drops.

Binance’s most active traders lowered their bullish (long) positions Tuesday and Thursday, driving down the price. long-to-short The ratio fell to the lowest in over 30 days, 1.7x. These traders reversed course as Bitcoin dropped below $112,000 and added upward exposure. The indicator gradually climbed to 1.9x, favoring longs.

Whales and market-makers at OKX, on the other hand, moved in an opposite direction. They added longs from Tuesday to Wednesday, betting likely that support of $112,000 would be maintained. OKX’s ratio of longs to shorts soared up to 4.2x by Thursday. This was the highest it had been in two weeks. Bitcoin’s fall to $108,700 caught them off-guard, and forced them to cut their leverage.

Bitcoin Put Options would lead by $1 Billion if the price fell below $110,000

The range of $95,000 to $100,000 was the target for bearish bets on Bitcoin monthly options that expire at 8 am UTC this Friday. Bulls must reclaim $110,000 by the end of that month to gain $1 billion in put options. 

As BTC derivatives showed resilience over the past few weeks with funding and open interest rates relatively constant despite recent price drops, some analysts expect the selling pressure will ease.

Bitcoin’s two-month premium to the spot market remained at 5%. This is within a neutral range of 5% to 10 %. It also shows that there is a limited demand for long positions. Shorts, on the other hand, are more cautious. According to CoinGlass, Bitcoin futures’ open interest is still strong at $79 Billion, with a decline of 3% in the last two days.

Bitcoin ETFs recorded $241 in net flows on Wednesday. These figures support moderate investor optimism. At the same, concerns over the US labor market Powell, the US Federal Reserve Chairman. Labor Department announced Thursday that the number of continuing claims for unemployment benefits was relatively unchanged at 1.926 millions, for the week ended September 13.

Bitcoins under pressure from a potential US shutdown

Bitcoin has been under pressure due to traders’ increasing risk-aversion. This is especially true amid fears of a possible US government shutdown. The Office of Management and Budget of US president Trump, first reported Politico has instructed the agencies that receive discretionary funds to revise existing plans before a potential funding gap on Oct. 1 occurs.

Demand for stablecoins from traders in China offers additional information about their positioning. Stablecoins are typically priced about 2% higher than the official US Dollar rate due to a high interest in cryptocurrency. A discount of more than 0.5% is often a sign that traders are leaving the crypto-market.

Related: Bitcoin crumbles below $109K, but data shows buyers stepping in

The Tether (USDT() trades at an modest premium of 0.3% relative to the USD/CNY official rate, indicating a neutralized market. It is possible that traders are injecting money into cryptos to profit from the recent drop, which supports the views of those who expect gains after Friday’s option expiration.

This is not legal or investment advise. It is only intended as a general guide. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.