Summary of this article
An eleven billion dollar Bitcoin options expiry threatens major near-term price swings.
Concentrated dealer gamma hedging between seventy-five and eighty-two thousand dollars amplifies movement.
Delayed contract reissuance around United States midterm elections could increase market volatility.
Bitcoin traders are watching a major options expiry this week that could influence price movements, with $11 billion worth of Bitcoin options due to expire on October 30. The expiry comes as the cryptocurrency trades below $80,000, with traders also monitoring broader market uncertainty.
Why Could Bitcoin Options Expiry Trigger Price Swings?
The expiring contracts represent roughly one-third of all outstanding Bitcoin options on Deribit, according to Bloomberg. While many options are linked to prices well above current levels, contracts closer to Bitcoin’s market price could make dealer hedging activity important during the expiry.
CoinMarketCap data showed Bitcoin at $79,861.75, down 1.11 per cent over 24 hours and 3.16 per cent over the past week at the time of writing. Adam Haeems, head of asset management at Tesseract Group, told Bloomberg that about 70 per cent of the expiring options’ gamma, a measure of how dealers’ hedging requirements change as prices move, is concentrated between $75,000 and $82,000.
The direction of the impact will depend on dealers’ positions. If dealers are short options, their hedging activity could add to selling pressure if Bitcoin falls towards $75,000 to $78,000. If they hold long positions, their trades could instead help limit the decline, Haeems said.
Why Could Volatility Rise After the Expiry?
Options sellers who write contracts against their Bitcoin holdings typically sell new contracts as existing ones expire. However, some may delay issuing new contracts until after the November 3 US midterm elections, potentially reducing the options-related hedging activity that can help absorb price movements.
Caroline Mauron, co-founder of Orbit Markets, said the reduced supply of this activity could contribute to sharper price movements after the expiry. “This could lead to higher volatility through the results, as the usual gamma supply dries up,” Mauron said.
The elections may also influence US crypto policy, as control of Congress could affect President Donald Trump’s ability to advance his agenda. Cryptocurrency industry funding has featured in US election politics, adding another dimension to the debate over future regulation. However, the immediate focus for Bitcoin traders remains the options expiry and how dealers adjust their positions around key price levels.
