Bitcoin braced for a near 1 billion shock as Bitcoin traders and investors have seen a return to volatility this month, with the bitcoin price unexpectedly dropping in early September.
The bitcoin price, which had broken $12,000 per bitcoin at the end of August, dropped to around $10,000 amid a broader market sell-off before somewhat rebounding.
This week, the bitcoin market is braced for almost half of nearly $2 billion worth of bitcoin options to expire—something that could bring a fresh wave of volatility.
Bitcoin open interest, effectively traders betting on what they expect the price of bitcoin to be, has risen to $1.9 billion around triple what it was just a few months ago, according to data from bitcoin and crypto analytics provider Skew, with some 47% of existing contracts due to expire this coming Friday.
The hovering bitcoin options expiry could spark a fresh trial of price volatility. Previous large expiries have caused the market to “bounce aggressively “, according to some analysts.
When options expire, the trader that made the bet will either get a payout or lose their stake.
The bitcoin options market has swelled through 2020, led by Deribit, a Panama-based derivatives exchange, which accounts for the vast majority of the bitcoin options contracts .
Meanwhile, bitcoin market observers have been buoyed recently by bitcoin’s bounce at the psychological $10,000 level.
Elsewhere, markets are nervously eyeing what has been called a second wave of coronavirus infections, with U.S. stock market futures pointing to a dull start to the week.