The cryptocurrency market is bracing for potential price fluctuations in the upcoming week as approximately $3 billion worth of bitcoin options and $1.8 billion in ether options are set to expire on September 29. This date carries particular significance as it marks both the end of the month and the quarter.
Luuk Strijers, Chief Commercial Officer at Deribit, has pointed out parallels between the cryptocurrency market and traditional finance regarding options expiry events, especially those occurring quarterly. He noted that such occurrences can trigger substantial trading volumes and heightened volatility.
Although the Bitcoin Volatility Index, which gauges volatility expectations among bitcoin option traders for the next 30 days, has been hovering near historic lows, it has shown a slight uptick in the past month, according to data from The Block’s Data Dashboard.
Strijers explained that “market maker movements can lead to amplified market volatility, particularly during the time leading up to the expiry of the options.” He added that “market makers adjust their hedges to align with changes in the price of the underlying asset.”
However, Strijers cautioned that the impact of September’s monthly and quarterly expirations might not necessarily result in significant market swings, given the current market conditions.
On Friday, Bitcoin’s price exhibited minimal movement, edging up by 0.1% to $26,544, as per CoinGecko. Over the past month, the world’s largest cryptocurrency by market capitalization remained relatively flat, registering a slight decline of 0.4%.
Institutional participants utilizing the Deribit derivatives exchange often employ sophisticated strategies related to options expirations, Strijers noted. These participants typically aim to manage volatility and delta hedge their exposure, leading to frequent adjustments to their hedge positions. Such actions may impact bitcoin prices and market volatility.
