The weekly options expiry potentially set the stage for BTC and ETH price moves. However, the regular weekly event does not currently point at higher volatility.
The weekly Deribit options expiry points to a less eventful weekend. Usually, the Friday expiry brings at least somewhat increased volatility, potentially sparking weekend rallies. This time around, the weekly options expiry signals a slightly bearish attitude.
A total of $3.4B in open interest was set to expire on Friday, with a predominance of put options. The put/call ratio for BTC expanded to 1.3, signaling a more marked bearish attitude compared to previous weeks.
The latest BTC and ETH options expiry signals lower future volatility. The market is already taking into account the potential for a 25-basis-point rate cut by the Fed, not signaling any expectations for unexpected rallies. As Cryptopolitan reported earlier, a Fed price cut was most probably priced into the crypto market.
The other weekly events until the end of September have lower notional value. At the end of the month, around $17.7B in options are set to expire, with a predominance of call options.
BTC still strong despite altcoin season
The crypto fear and greed index took a few steps back, but is still in ‘greed’ territory. BTC dominance slid to 55.9% as altcoins took over with outsized pumps. Despite this, BTC still shows signs of recovery, alongside ETH.
Ahead of the options expiry, BTC traded at $115,400, while ETH rallied to $4,549.37. Altcoins have more dramatic rallies, but all hinge on the solid performance of BTC and ETH.
BTC open interest on all crypto exchanges is above $41B ahead of the weekend, with ETH open interest recovering above $29B. On Hyperliquid, BTC open interest has inched up again to $3.9B, while ETH reached $2.9B.
BTC next step: $120K or back to $110K?
Based on derivative trading, BTC is locked in a range where the most probable price moves may be limited between $111,000 and $116,000.
Open interest has accrued for short positions all the way up to $120,000, but the bulk of positions is at a lower range, so a short squeeze to $120,000 is less probable.
On the downside, BTC may dip to $111,000, attacking over $75B in long positions. In the past 24 hours, BTC already saw over $82M in short liquidations. The surprise ETH rally led to $92M in liquidations for the past day, as the crypto market still shows exuberance.
After a month of price records, crypto assets are setting up for one of the historically slow months. This time around, the market suffers smaller drawdowns, but whales regularly take profits to roll over into better positions.
For now, the BTC bull market is seen as intact, with positive macro conditions. In the short term, the market can fluctuate and cause liquidations. At the same time, volatility has fallen near an all-time low of 1.12%, with fewer events to cause cascading capitulation. Demand for spot BTC is also at an all-time peak, with more coins locked away from the market into corporate treasuries.
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Source: https://www.cryptopolitan.com/weekly-options-expiry-btc-rally-120k/
