A recent tweet by Skew Markets claims that 50% of total bitcoin options open interest is set for a drop-off in December. A big expiry is ahead!
Bitcoin Price Slated To Rise Post Stabilization of Open Interest
In case previous scenarios are considered, one or two weeks prior to the expiry, new quarterly contracts will be rolled out. Subsequently, open interest will decrease in December and then increase again in March. CME futures will expire in December and this would lead to a decrease in the open interest.
With that being said, when both price and open interest decline it gives rise to liquidation by discouraged traders with long positions. If the trend continues it leads to a price decline. Once open interest stabilizes, prices began to rally again. Further, if the open interest numbers show minimal oscillation, it is followed by a price rise and also a rise in open interest.
CME Futures Expiry Led to A Rally in March 2019
During the expiry of CME futures in 2018, the price of Bitcoin dropped from $3,850 to $3,550 in the day before the expiration, with an even bigger drop from $4,200 to $3,550 in the 4 days before the expiration. Interestingly, two days before February expiration the price of Bitcoin (BTC) rising from $3,900 to $4,150 before crashing to $3,700. As a matter of fact, the rally did not begin until after the March expiration. This implies that either the CME traders shorted Bitcoin to protect their positions or it was a coordinated effort to start a rally post-March expiration.
Leading Market Analyst Predicts BTC Price Peak in Early 2020
Adaptive Fund Partner and analyst, Willy Woo recently predicted that Bitcoin price will cross $14k in the starting months of 2020. This will further lead to a bull run and will be the best of time to put funds in Bitcoin. This will further lead to an increase in open interest and also Bitcoin price.
CME Futures Accused of Market Manipulation
On Tuesday, in early trading, BTC/USD futures suddenly tanked to below $8,500 before rebounding to $9,300.
The lower level led to a gap formation in futures trading. While the exchange often seeks to fill these gaps, this time it was done with minimal resources.
“I cannot believe how crazy trading BTCUSD on the short term is right now. The gap on the CME has filled already. It’s thinly traded yes. But man, I’m highly suspicious of the price action across all the exchanges of late, more so than usual,”
Willy Woo commented
While allegations of price manipulation ensued, nothing was proven as such.
Will Bitcoin price rise or establish a bottom? Let us know, what you think in the comments below!
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Coming from a physics background the unpredictability and intrigue of the cryptoverse attracted me to take a dive in this field. I am all eyes and ears for the latest trends in blockchain and crypto sphere. Whenever I am not writing or researching, I love to read sci-fi novels, play basketball and watch action movies. I strongly believe that blockchain and cryptocurrency will bring lasting transformations in people’s lives in the years to come. You can reach out to me at supriya [at] coingape.com.