[Bitcoin Now] Approaching Monthly Option Expiration... Sideways Movement Around 55 Million Won

$2 Billion Bitcoin Options Expire on the 28th... Market Volatility Inevitable

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The leading cryptocurrency Bitcoin is consolidating in the 55 million KRW range. As the Bitcoin options expiration date approaches on the 28th, the cryptocurrency market has become unstable, which is interpreted as the reason for the halt in Bitcoin's upward momentum.

According to the domestic cryptocurrency exchange Upbit, as of 3:02 PM on the 27th, Bitcoin recorded 55.37 million KRW, up 0.26% compared to the previous day. On the 25th, Bitcoin rose to 57.10 million KRW but dropped 3.28% to 55.22 million KRW the day before. Since then, there has been little change in the 55 million KRW range.

Altcoins show a similar trend. At the same time, Ethereum recorded 3.65 million KRW, up 0.14% from the previous day. Ethereum has been consolidating in the 3.60 million KRW range after a 3.11% decline the day before. Ripple, Dogecoin, and Ethereum Classic are also showing fluctuations in the 0% range.

The market appears to have become unstable as the Bitcoin monthly options expiration date approaches. On the 26th (local time), cryptocurrency specialized media CoinDesk reported that Bitcoin options open interest worth 2 billion USD (approximately 2.3382 trillion KRW) will expire on the 28th. Philip Bekaj, CEO of cryptocurrency investment firm XBTO, explained, “The current decline in the cryptocurrency market is due to the approaching options expiration,” adding, “The market generally rebounds after the monthly options settlement.”

Meanwhile, remarks by U.S. Federal Reserve (Fed) officials about tapering asset purchases seem to have dampened investor sentiment. On the 26th, Robert Kaplan, President of the Dallas Federal Reserve Bank, expressed the opinion that the Fed should announce tapering in September. Until the 20th, he had argued that tapering should be delayed if the COVID-19 Delta variant adversely affected the economy.

If the Fed proceeds with tapering, market liquidity will inevitably decrease. Since the spread of COVID-19, governments worldwide have supplied liquidity to recover the economy, leading to a surge not only in the cryptocurrency market but also in the stock market. When Bitcoin's market capitalization exceeded 1 trillion USD in February, there were criticisms that the bubble was caused by excessive liquidity.