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Scary Bitcoin volatility? $750M in BTC options set to expire for Halloween

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A big Bitcoin (BTC) volatility spike could occur by the month’s end as two major factors come into play. The BTC options market nears a massive $750 million expiration and the CME futures market’s open interest has also soared.

When an options expiry nears, holders of options contracts have to adjust their contracts before or right after the expiration. Often times, that could cause volatility in the price of Bitcoin.

Options open interest. Source: Skew

Monthly close, options expiry, and CME expiration all coincide

It is difficult to gauge the volatility coming from Bitcoin options until one to two days before the actual expiration. But, the upcoming expiration, which would occur on the last Friday of the month, coincides with other important dates.

According to the CME Bitcoin futures calendar, the October futures contract expires on Oct. 30. All CME monthly Bitcoin futures contracts expire on the last Friday of each month.

The upcoming expiry of CME Bitcoin futures contracts is particularly important because of its high open interest.

As Cointelegraph reported last week, the CME became the second-biggest Bitcoin futures market by open interest, overtaking Binance Futures and other major exchanges.

Since CME tailors to accredited investors and institutions, the CME Bitcoin futures market surpassing major cryptocurrency exchanges carries various significance. Most notably, it indicates that the demand for BTC from institutions has never been this high before.

The term open interest refers to the total amount of long and short contracts open in the market. Hence, if open interest is high nearing expiration, it could trigger large volatility.

Atop the highly-anticipated options and futures expirations, Bitcoin also looks ahead at an important monthly close.

On Oct. 26, upon its weekly candle close, Bitcoin officially marked its first completed weekly candle above $13,000 since January 2018.

If BTC stays above $13,000 into November, it would confirm its first monthly candle close above $13,000 in nearly three years.

The Bitcoin weekly price chart. Source: TradingView.com

Researchers from Skew said, the “organic” nature of the ongoing Bitcoin rally might raise the chances for a prolonged uptrend. As Cointelegraph reported, Bitcoin options are pricing in a 7% chance of BTC hitting $20K in the next two months.

Can BTC sustain its momentum?

Whether the expected increase in volatility would aid BTC or fuel a sharp rejection depends on BTC’s momentum.

If the price of Bitcoin can stay above $13,000 until the monthly close, it would increase the chances of a rally continuation over a pullback.

Technical analysts, including the psuedonymous trader Bitcoin Jack, state that the current technical structure of Bitcoin is bullish. The trader said:

“BTC 200-day average (green) trending above all-time average (orange) around the time of halving has never failed to induce a supply void driven rally. This is fundamentally programmed into Bitcoin and as long as demand is present, won’t break Last I checked, demand is present.”

The continuous increase in the price of Bitcoin, despite on-chain data hinting at a miner sell-off, also shows new demand is flowing into the market.

The selling pressure from existing players, miners and investors is being offset by new capital that is entering the cryptocurrency market.

After the last options expiry on Sep. 25, the price of Bitcoin rose from $10,686 to $11,720 in the following 16 days. At the time, Cointelegraph reported that volatility may result from the September options’ expiration.

Source: https://cointelegraph.com/news/scary-bitcoin-volatility-750m-in-btc-options-set-to-expire-for-halloween

Blockchain

Respected Financial Historian Calls for Bitcoin Integration into U.S. Financial System

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Financial historian and Milbank Family Senior Fellow at the Hoover Institution at Stanford University, Niall Ferguson, has penned a lengthy piece on Bitcoin which is getting noticed by the crypto community.

In it, the former Harvard and Oxford University professor commented on how the traditional naysayers and debunkers have softened their collective stances this year as the asset outperforms most other traditional investments.

Big Bitcoin Endorsements

The piece was re-tweeted a number of times, most recently by 10T Holdings co-founder Dan Tapiero who observed that this could garner huge attention. Of particular note were the comments on the integration of Bitcoin into the U.S. financial system;

“Rather than seeking to create a Chinese-style digital dollar, Joe Biden’s nascent administration should recognize the benefits of integrating Bitcoin into the U.S. financial system,”

Ferguson made additional references to China’s digital yuan adding that its potential for adoption for remittance payments or cross-border trade settlements is ‘substantial’.

The Bloomberg columnist had previously written on the virtues of Bitcoin stating that there are far fewer coins in circulation than there are millionaires on the planet.

“If millionaires collectively decided to hold just 1% of their wealth as Bitcoin, the price would be above $75,000 — higher, if adjustment is made for all the bitcoins that have been lost or hoarded.”

Big Names Paying Attention

He made reference to a number of big names in the financial world including Paul Tudor Jones, Stan Druckenmiller, Bill Miller, and even Ray Dalio that are now appearing to turn bullish. Even ardent Bitcoin detractors such as Peter Schiff and Nouriel Roubini, also mentioned in the article, have started to change their tune.

He added that adoption has much further to go, quoting Argentine-born tech investor Wences Casares who stated after ten years of working well without interruption, with close to 100 million holders, adding more than a million new holders per month and moving more than $1 billion per day worldwide;

“it has a 50% chance of hitting a price of $1 million per bitcoin in five to seven years’ time.”

The advantages of sovereignty and scarcity are obvious at a time when the supply of fiat money is exploding, Ferguson added, concluding that there was a clear demand for more privacy when it comes to a payment system that will inevitably replace cash.

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Source: https://cryptopotato.com/respected-financial-historian-calls-for-bitcoin-integration-into-u-s-financial-system/

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Further Declines in Bitcoin Price Possible Though Grayscale is Crucial, Notes JPM Analyst

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Although Bitcoin has recovered from its vigorous price losses during the Thanksgiving massacre, analysts from JPMorgan Chase & Co believe that further declines may still occur.

The strategists pointed out that Grayscale, through its Bitcoin Trust, will play a significant role in future BTC price developments.

Is Bitcoin To Head Further South?

The primary cryptocurrency reached a new yearly high of $19,500 last week; thus, it came less than 3% away from the 2017 all-time high of $20,000. As the community began speculating on how long it will take to surpass that level, the trend reversed viciously.

Bitcoin headed south and lost over $3,000 of value in hours. Nevertheless, the cryptocurrency has recovered most of its losses and trades north of $18,000.

A JPM analysis, led by Nikolaos Panigirtzoglou, recently said that the Thanksgiving price drops had cleared the “previous froth in momentum traders’ positioning.” However, the strategists hinted that Bitcoin could still go lower.

“Momentum traders such as commodity trading advisors and other quantitative funds likely played a big role in the slide by unwinding long Bitcoin futures positions. Momentum traders have room to further propagate” the Bitcoin decline, noted the analysts cited by Bloomberg.

Apart from broaching “momentum traders,” the strategists also discussed various other reasons behind the price developments. Those included the rumors of new regulations proposed by the Trump administration and profit-taking.

Grayscale Is Key

The JPM strategists also highlighted the significant role of Grayscale and its Grayscale Bitcoin Trust on the market. The cryptocurrency manager is the most preferred company for institutional investors to receive exposure to Bitcoin (and other digital assets) without worrying about storing the funds.

This has been exemplified through 2020 as Grayscale has reported back-to-back recording-breaking quarterly results. The assets under management (AUM) have exploded in the past 12 months to over $10 billion. Somewhat expectedly, the Grayscale Bitcoin Trust has the most substantial share.

The analysts asserted that if there’s a decline in the interest towards GBTC, this could damage the narrative that Bitcoin has become a favorite among institutional investors:

“A failure by the Grayscale Bitcoin Trust to receive additional inflows over the coming weeks would also cast doubt to the idea that institutional investors such as family offices have embarked on a trend of embracing Bitcoin as digital gold replacing traditional gold as a long-term investment.”

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Source: https://cryptopotato.com/further-declines-in-bitcoin-price-possible-though-grayscale-is-crucial-notes-jpm-analyst/

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Bitcoin Breaks New All-Time Highs Targeting $23,000

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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

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Source: https://cryptobriefing.com/bitcoin-breaks-new-all-time-highs-targeting-23000/

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