Bitcoin Trims Losses Ahead of Major Options Expiry
The price of bitcoin (BTC) has dropped slightly in the past day, after heavy selling yesterday brought it down to a low of USD 40,200. The selling comes just ahead of one of the largest bitcoin options expiry days of 2021, on September 24.
At 13:44 UTC, BTC was down by 1.6% over the past 24 hours to a price of USD 43,255
However, the price has already recovered from its overnight lows of USD 40,200, with a large bullish “wick” now visible in the daily chart as evidence that dip buyers arrived to bid the price higher.
Following yesterday’s selling, a summary of the situation from crypto derivatives exchange Deribit also gave some traders hopes that the worst is already behind, and that a relief rally could be coming next.
1) Evergrande contagion fears knocked all markets, pumping Crypto Vol from 2month lows and firming Put Skew as concerns linger over further downside.— Deribit Insights (@DeribitInsights) September 21, 2021
But Asian markets calmed, BTC bounced 3k, S&P 100 points off lows, VIX down from 29 to 22%, suggesting primary capitulation done. pic.twitter.com/fs4CuCLORL
Despite the recovery seen so far, however, the bitcoin market is still on the edge for the upcoming options expiries this Friday, with close to BTC 70,000 in options contracts set to expire across all major exchanges, per data from Bybt.com.
At current prices, the expiring contracts are worth some USD 3bn, making it one of this year’s largest expiry days.
Large amounts of options expirations have on occasion caused increased volatility in the spot markets, although this is by no means a certain outcome.
But although short-term relief can already be felt in the bitcoin market, longer-term signals based on on-chain metrics are potentially another cause for concern for bitcoin holders.
According to analytics firm Coin Metrics’ State of the Network report released today, bitcoin’s market value to realized value (MVRV) ratio – described as “one of the most accurate on-chain indicators for gauging BTC market cycles” – has now dropped to about 1.73 after reaching a high of 1.94 when bitcoin spiked above USD 52,000.
A MVRV below 2 has historically “signaled bear territory,” Coin Metrics said, without going into further detail about what this might mean for the near-term.
In either case, Mike Novogratz, CEO of Galaxy Digital, claims he’s not nervous about the selloff: