These contracts are scheduled to expire at four o’clock on Friday evening, Singapore time, amid fears that this huge entitlement will increase pressure on the largest cryptocurrency in the world.
Most of these contracts are focused on betting on the rise in prices, but the decline of “Bitcoin” has pushed many of these positions out of the profitable range, which may push traders into more defensive or pessimistic positions.
“These are investment positions that were betting on rising prices in the medium term, but are now being valued in light of the decline in the spot price,” said Jean-David Pequeño, trading director at Deribet, adding that most bullish long positions are now “out of profit.”
During Wednesday’s trading in New York, Bitcoin fell below $60,000, recording $59,023, its lowest level since October 2024, before rising to $60,800 at noon on Thursday in Singapore.
The currency is still having difficulty regaining its momentum since the market collapse on October 10, as it has fallen by more than 50% from its record high, and is trading below its 200-week moving average.
Options contracts due on “Deribet” constitute about 37% of the total outstanding positions in the market, while the ratio of buy-to-sell contracts is 0.83, which means that bets on the rise are still greater than bets on the fall.
Adam Hymes, head of asset management at Tesseract Group, said that expiration mechanisms may contribute to liquidating existing positions, but they do not determine the direction of the market, noting that weak liquidity at the end of the financial quarter and the beginning of summer may amplify any price movement on Friday.
He added that the actual test of the market will appear in the first week of July, after the end of the liquidation of the quarter’s positions and the decline in the effect of financial leverage.
These pressures coincide with the exit of $3 billion from Bitcoin funds traded in the United States since the beginning of June, according to data compiled by Bloomberg.
Strategy, the largest institutional holder of Bitcoin, is also facing increasing pressure amid concerns about its ability to meet its financial obligations.
Cryptocurrencies are also under pressure from the possibility of rising interest rates, as investors in this environment tend to move away from assets that do not provide a periodic return.
Griffin Ardern, co-founder of the Primal Fund, said that bearish bets on “Bitcoin” have increased, in light of tough statements by Federal Reserve officials and the rise in US Treasury bond yields, adding that “Bitcoin” often faces difficulties in an environment in which liquidity declines. (Bloomberg)
