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Bitcoin faces ‘change’ as options market faces recession

Bitcoin Option contracts worth more than $ 1.7 billion expired on June 26. Deribit BTC options had close to $ 1.3 billion of total contracts, but with Bitcoin’s volatility before the expiration date, users weren’t expecting big price changes after the expiration date.

Before yesterday’s expiration, the Options market did not notice any bearish strength. Now, according to an update from Deribit’s Tony Stewart, even though Bitcoin expired the price did not register any major changes, volatility flows were active and the bearish bias was evident for spot markets as sellers continued to be active. A similar dataset was also included in Arcane’s weekly update, where premiums from collective retail platforms were seen to drop to the spot price, prior to the Bitcoin Futures Contract Expiration.

Stewart noted that over the course of June, the longs were significantly affected due to Bitcoin’s negative returns. The publication said:

“Two things have happened. The June longs have perhaps become hesitant in the purchase option, those who have long since been unable to materially buy more or have left. Consequently, Vol crushed it. “

Volatility was under immense pressure before the expiration of high call sales, which continued due to the low volatility implicit in the charts.

Before the expiration on Friday, the sale of options was still extremely aggressive and after the expiration, losses were observed in several long positions. However, this could open up an opportunistic call option for some users who recognize the benefits of option selling in a declining market.

Additionally, Stewart added that the realized volatility had been below 40 percent in the past week. Therefore, operators are also open to complying with low premium trading options. He said,

“The long-term structure and the August seller have applied the weakness even further: Jul31 fell 7%, 3% in September, big changes.”

Source: biased

It should also be noted that Skew’s probability index targeting Bitcoin’s ability to cross $ 10k in July had dropped to 24 percent after being near 50 percent when the month started. With the third quarter of the year on the way, it will be interesting to analyze the movement of Bitcoin and the derivatives market after 3 relatively bullish months.

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