The digital asset market is gearing up for the expiration of $1.1 billion worth of Bitcoin (BTC) options on October 11 amid the asset’s attempts to reclaim its previous high. In addition, the contract for $510 million worth of Ether (ETH) options is also expected to expire at the same time, causing panic within the broader crypto industry.
BTC and ETH Contracts Expiry
With the imminent expiry of Bitcoin and Ethereum options contracts worth a combined notional value of nearly $1.6 billion, the cryptocurrency market is bracing for volatility. The expiration of these contracts, which include 18,000 BTC and 212,000 ETH, could have a big effect on market movements in the days ahead.
Analysts note that Bitcoin options’ put-to-call ratio is 0.91, suggesting that there is a slight inclination toward put options. Put options enable holders to sell Bitcoin at a predetermined price.
Meanwhile, market observers have also determined the price at which the majority of the options contracts that expire become worthless, otherwise known as the maximum pain point. This level for Bitcoin is set at $62,000. However, the similar level for Ethereum’s options is $2,450, while the put-to-call ratio is 0.4.
Whale Movements Add to Bitcoin Market Uncertainty
Over the past three days, large Bitcoin holders or whales have sold or moved about 30,000 BTC. This massive transfer, equivalent to more than $1.8 billion in Bitcoin, has sparked worries about potential market declines in the future.
This sell-off is in line with a recent forecast that Bitcoin may see a steep price drop before picking up speed again. Market forecasts indicate that Bitcoin may first fall below $50,000 before starting a long-term bull trend that could eventually see it cross the $80,000 level.
China’s Fiscal Stimulus: A Potential Game Changer for Crypto?
Another notable development is that the digital asset market is set to benefit from China’s upcoming fiscal stimulus measures. The Chinese government is expected to announce a new wave of economic policies aimed at boosting financial activity.
Analysts predict that these measures, which could be unveiled by China’s Finance Minister Lan Fo’an, could inject fresh liquidity into global markets, including high-risk assets like cryptocurrencies. This will provide liquidity support for assets like Bitcoin and Ethereum.
While the precise scale of these fiscal measures is still unknown, there is growing speculation that they could exceed market expectations. If the stimulus turns out to be more aggressive than anticipated, the impact on digital assets could drive up demand.
Despite the decline in the cryptocurrency market volatility in recent weeks, a significant macroeconomic event, such as China’s fiscal stimulus announcement, could reverse this decline quickly. In addition, a sudden increase in liquidity could lead to a temporary surge in market activity as traders adjust their positions to accommodate the new changes.
Broader Economic Effects
Meanwhile, Alex Tapscott, Managing Director at Digital Asset Group, stressed that the Chinese intervention in its financial and property sectors could have a ripple effect on various asset classes. As the Chinese government stimulates economic activities, there could be increased buying pressure on digital assets.
China’s previous economic stimulus measures in late September, which included lowering mortgage interest rates and reducing reserve requirements for banks, were part of a broader effort to jump-start the economy. By reducing borrowing costs and encouraging lending, the Asian nation fueled economic growth, leading to stabilized markets.
Increased Demand for Bitcoin and Other Digital Assets
According to Tapscott, the ease in monetary and fiscal conditions would lead to increased demand for digital assets from investors. Given the interconnectedness of global financial markets, any significant monetary policy changes in China will likely reverberate across multiple asset classes.
This action could present new opportunities for traders and investors in the cryptocurrency space, especially if these stimulus measures are more robust than currently predicted. Consequently, the coming days will be critical for the cryptocurrency market as these multiple factors converge.
