Adam Vettese (eToro) | Analysts have warned cryptoassets such as bitcoin and ethereum could be in for a bout of volatility come Friday when nearly $2 billion-worth of options contracts expire, according to Forbes.
The data, provided by Skew, suggests the level of options contracts has tripled in the past three months to $1.9 billion in total. Around $1 billion of this is focused on bitcoin alone, with many contracts set between $11,000 and $12,000, higher than bitcoin’s current dollar prices. This has left experts warning that cryptoassets could experience sudden volatility as options expire on Friday and option holders put cryptoassets they hold back onto the market.
Equally, there is an argument that nothing could happen as option traders are not necessarily forced to trade the cryptoasset at the end of the contract. As there is such a large amount of options set to expire at once however, it could lead to added volatility as those traders take new positions or sell out of old ones, says Decrypt.
Charles Bovaird, a researcher at crypto research firm Quantum Economics, told Decrypt: “If a large number of contract holders use this ability to purchase bitcoin before the contracts expire, that would place upward pressure on the cryptocurrency’s price. Likewise, if contract holders used their options to sell, it would place downward pressure on bitcoin prices.
“However, it could also have very little impact at all. If the options contracts expire without being exercised, then they won’t place upward or downward price pressure on bitcoin.”