A significant event in the cryptocurrency market is set to unfold this Friday, with approximately $22.3 billion in crypto options expiring as the third quarter comes to an end. Among these, Bitcoin options, valued at about $17.06 billion, are notably the largest on record, marking a critical juncture for market participants.
Experts are raising flags about the current volatility surrounding Bitcoin, particularly emphasizing the importance of the $108,000 price level. Greg Magadini, director of derivatives at Amberdata, has pointed out that dealer positioning currently shows extensive short gamma at both $109,000 and $108,000. This setup necessitates that these price points hold stable to avoid potential forced selling, which could lead to a sharp downturn in prices. Specifically, Magadini indicated that a drop beneath $108,000 could trigger automated selling, pushing Bitcoin down to as low as $96,000 due to the current market volatility.
As it stands, Bitcoin is trading around $109,100, reflecting a loss of 3.8% on Thursday and a 6.5% decline over the past week, according to CoinGecko. This current market status places traders on high alert as they await the Core Personal Consumption Expenditures (PCE) index release, which is highly anticipated to yield insights into inflation trends. The Core PCE figure has remained sticky at around 3%, with month-over-month forecasts slightly contracting from 0.3% to 0.2%.
Reactions from experts suggest that a stronger-than-expected inflation report could further bolster the dollar’s recent rebound and intensify Bitcoin’s ongoing correction. Conversely, a softer inflation reading might catalyze a rebound, helping to reset the market conditions following the options expiry.
Maja Vujinovic, CEO and Co-Founder of FG Nexus, remains optimistic about the broader cryptocurrency landscape for the fourth quarter. She forecasts a positive trend driven primarily by increased demand for spot exchange-traded funds and improving liquidity. Magadini has also echoed this sentiment, suggesting that long-term prospects for Bitcoin remain bright, provided the Federal Reserve shifts its approach to inflation control. He expressed confidence that if inflation measures ease up, Bitcoin could potentially soar to prices exceeding $250,000 in the future.
As traders navigate this precarious period, the interplay between options expirations and inflation readings will likely set the tone for Bitcoin’s price trajectory in the immediate future. The crypto community watches closely, understanding that this week could be pivotal in determining not just short-term movements, but the overall market sentiment going into the final quarter of the year.
