23k BTC on CME Futures and 50k BTC in Options Expiring Today

Bitcoin is currently down 0.05% in the past 24 hours trading around $6,640 after hitting $6,872 last night, yet again rejected at $7,000 level. Interestingly, more than 340,000 addresses are holding about 236k BTC at about $7k level.

According to trader Nebraskan Gooner, the crypto asset is working in a tight range. A daily close above $6,750 he said “would surely” take us above $7,000 while the close below $6,400 means, falling to $5900 and even $5200.

Bitcoin has also printed a death cross, which indicates a potential for major sell-off. This technical chart pattern has been a reliable indicator of some of the most severe bear markets in the traditional markets which is now seen in bitcoin.

But bitcoin volatility could see a further hike as futures contracts on CME and options expire today.

Activity on CME has been declining ever since February when the price of Bitcoin was trading around $10,500. Crypto data provider TradeBlock, noted,

“March bitcoin futures trading volume at the CME declined despite elevated volatility in spot markets for the month. While the CME’s bitcoin futures product saw record volumes in January and February, March activity has fallen considerably.”

Source: @TradeBlock

As for today’s futures contract expiration, Bitcoin futures on regulated exchange CME has about 23,000 BTC worth over $150 million in open interest for March 27th contracts.

Besides bitcoin futures, options are also expiring today. About 50,000 BTC options worth about $330 million are outstanding on crypto exchanges, out of which $50 million are in open interest on March 27th expiry on Deribit.

“For reference, the Deribit Exchange open interest on options last year was half the value of open interest that is present on exchange now. ($300m -> $600m). The same case for BitMEX March 27th futures,” noted Trajan.

Skew-Total-BTC-Options-Open-Interest
Source: Skew.com

According to Su Zhu, CEO of Three Arrows Capital this quarter is “very important” to watch. It is expected that the expiry of Bitcoin futures and options would result in heightened volatility.

Zhu further noted, “Last yr market bounced quite aggressively from backwardation to contango after the expiry.”

Backwardation is when the spot price of an underlying asset is higher than the futures price while Contango is when the price of a commodity is higher in the futures market than the current price of the commodity. Now it’s to be seen if we will see the same scenario happening this time as well.

Backwardation is happening in both gold and bitcoin which Zhu said could be because “mkt has re-learned fear and is showing preference for owning actual assets vs owning derivatives of those assets.”

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Author: AnTy

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