Key insights:
Traders have decreased bullish positions, reflecting mixed market sentiment ahead of the upcoming $22 billion monthly Bitcoin options expiry on Friday.
Stablecoin premiums and Bitcoin ETF inflows suggest cautious optimism, indicating traders may be looking for short-term gains.
Bitcoin (BTC) has fallen to its lowest point in over three weeks, resulting in $275 million in liquidations of leveraged bullish positions. Traders are questioning if the approaching $22 billion BTC options expiry this Friday is the reason behind the drop below $109,000, and whether professional investors anticipate further price declines.
At Binance, top traders trimmed long (bullish) positions on Tuesday and Wednesday, pushing the long-to-short ratio down to 1.7x, its lowest in more than 30 days. As Bitcoin dropped below $112,000, these traders began to shift strategies, increasing their long exposure as the ratio gradually climbed back to 1.9x.
In contrast, whales and market makers at OKX opted to increase longs between Tuesday and Wednesday, likely betting that the $112,000 support level would hold firm. By Thursday, OKX’s long-to-short ratio surged to 4.2x, the highest in over two weeks. However, Bitcoin’s decline to $108,700 surprised these players, prompting them to reduce leverage at a loss.
Potential Bitcoin put options gain $1 billion lead if price dips below $110,000
Bearish positions for Bitcoin’s monthly options expiry at 8:00 a.m. UTC on Friday are targeting the $95,000 to $110,000 range. Should bulls fail to recover the $110,000 mark by that time, put (sell) options would attain a $1 billion edge.
Some analysts, however, anticipate that selling pressure may ease after the expiry, as BTC derivatives have shown resilience recently, with open interest and funding rates remaining stable despite the recent price dip.
Bitcoin’s two-month futures premium relative to spot markets remained steady at 5%, situated within the neutral 5% to 10% range. This suggests a limited appetite for bullish positions, while also indicating that short sellers are cautious and not aggressively betting on further downside. Bitcoin futures open interest remains robust at $79 billion, a 3% decrease over the past two days, according to CoinGlass data.
Additionally, Bitcoin exchange-traded funds recorded $241 million in net inflows on Wednesday, reflecting moderate optimism among investors. Concurrently, concerns regarding the US labor market mentioned by US Federal Reserve Chair Jerome Powell continue to loom. The Labor Department reported on Thursday that continuing jobless claims remained relatively unchanged at 1.926 million for the week ending September 13.
Bitcoin faces pressure amid potential US government shutdown
Bitcoin is under pressure as traders exhibit rising risk aversion, particularly with concerns over a potential US government shutdown. A memo from the Office of Management and Budget (OMB), first reported by Politico, instructed government agencies to adjust plans in anticipation of a possible discretionary funding lapse on October 1.
Demand for stablecoins in China offers additional context regarding traders’ positions. Generally, a strong interest in cryptocurrencies leads stablecoins to trade approximately 2% above the official US dollar rate. Conversely, a discount exceeding 0.5% often indicates fear, as traders exit the crypto market.
Related: Bitcoin drops below $109K, yet data shows buyers stepping in
Currently, Tether (USDT) is trading at a slight 0.3% premium relative to the official USD/CNY rate, suggesting a balanced market. This indicates that some traders may be allocating capital into cryptocurrencies to capitalize on the recent dip, supporting the perspective of those expecting gains after Friday’s options expiry.
This article is intended for general informational purposes and should not be regarded as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
