Crypto Market Braces Up For Expiring Options Contracts

Traders who are into the Bitcoin market might have so much to say about where the asset swings price in the coming days. According to several details, the Bitcoin options contract is set to expire, and this could heavily lean on the price of the leading digital asset. If they expire, it would see the holders of the contract dump their entire holding on the market and the price of the asset plummet.

Notably, Bitcoin is already on a steady decline, with the digital asset seeing reds after touching an all-time figure last week. If they choose to register to reinvest their holdings, then the crypto market could be flush with new money.

Ethereum contacts are also expiring

Expiring side-by-side with the $3.3 billion worth of Bitcoin options contract is the Ethereum options contract’s expiration. Noticeably, the Ethereum contracts worth $613 million is also set to expire today, and it will see users cash in on 400,000 Ethereum. The options contract allows users to purchase Bitcoin at a rate that would be specified in the future.

Even though they have the right, they can choose not to buy if they are no longer interested in purchasing. In plain terms, Bitcoin options are just a way to generally predict how much Bitcoin would be worth at a specific time. Traders can choose to hold their positions if it looks like their predictions would come through.

Also, with the day dragging nearer, the options contracts would be worth more if it looks like it would fine to pass and less valuable if it looks like it would not come true. The only difference between options and futures contracts is that where the options traders are not compelled to buy if they don’t want to, the futures contract holders are forced to buy the digital asset at a price.

March would see the largest expiring contracts

Even though they differ slightly, both futures and options contracts come in variations of sizes and have different expiry dates. But a seemingly important day in the part of the lives of options and futures contract holders is the last Friday of every month as loads of contracts in the sector expire on that day. With the market set to expire, a broker has weighed in on the effect that it would have on the market. Giving his opinion, a researcher at prime broker has said that the expiring contracts would not affect the market that much.

He noted that he doesn’t feel like the effect would be noticeable at the size that they are and the number of people holding them. He also noted that even though it is normal practice for a slight decline to happen when traders take their positions, the crypto market has always come back, and it would happen this time around again. Compared to March, the number of Bitcoin and Ethereum contracts set to expire is one of the smallest. March would see about $4 billion and $814 million Bitcoin and Ethereum expire, respectively.

Leave a Reply

Your email address will not be published. Required fields are marked *