Volatility Expected as $3 Billion Bitcoin and $1.8 Billion Ethereum Options Expire
Next week, the cryptocurrency market is bracing for potential volatility as approximately $3 billion worth of Bitcoin options and $1.8 billion worth of Ethereum options are set to expire on September 29. This expiration date holds significance as it marks the end of both the month and the quarter. The expiration of these options can lead to increased transaction volumes and fluctuations in the market, as market makers adjust their hedges based on the underlying asset’s price.
Impact of Options Expiration on Market Volatility
Luuk Strijers, the Chief Commercial Officer at Deribit, highlighted the similarities between the cryptocurrency market and traditional finance, emphasizing the potential impact of options expiration on market volatility. Strijers noted that market makers’ actions during the period leading up to options expiration can result in increased volatility.
While the impact of monthly and quarterly expirations in September is expected to be more significant than daily or weekly expirations, Strijers suggested that current market conditions may not necessarily lead to substantial market movements.
Potential Market Performance and Influence of External Factors
Following the recent decision by the Federal Reserve to maintain interest rates, some analysts believe that Bitcoin (BTC) may experience upward momentum in the coming week. With the pressure of potential rate changes alleviated, BTC could potentially show a positive performance.
However, it is important to note that market movements are influenced by various factors, including global economic conditions, regulatory developments, and investor sentiment. Therefore, while the expiration of options may contribute to short-term volatility, the overall market performance will likely be influenced by a combination of internal and external factors.
This is not investment advice.