After another week of bitcoin price volatility, including a new all-time record, a new record of options expiring on March 26 could play a key role in price action and the continuation of this volatility in the coming days.
Options are a contract for the right to buy or sell an asset at a specified price. According to data analytics firm Bybt, there are more than 100,000 BTC – the equivalent of $ 5,574,000,000 (given the bitcoin price of $ 55,740 at the time of writing) – of options expiring on numerous major exchanges this Friday, March 26. This makes for an interesting trading session entering into the weekend.
This level of expiring options will set a new record, breaking the $ 4 billion mark set at the end of January this year. Bitcoin price closed at just over $ 33,000 on Jan. 31, meaning that bitcoin has rallied nearly 100 percent since the previous options record expired.
Interest on bitcoin options has skyrocketed this year, more than doubling since late last year, from about $ 5 billion to now nearly $ 14 billion. With options, there are calls (bets that the price will go up) and there are puts (bets that the price will go down). Overall, the market is leaning towards bullish with a current call-to-put ratio of 1.11. Anything above one is bullish, which means that at a ratio of 1.18, the market is leaning 11 percent in favor of more upside potential.
Put options appear to be targeting the $ 40,000 range and the $ 47,500 range, while call options expiring on Friday are eyeing the $ 60,000 range.
If the past is any indication of what’s to come, it should bring some short-term volatility, but eventually more upside in the weeks ahead.
This is a guest post by William Clemente III. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine