What To Expect as $6B Worth of Bitcoin Options Are Set to Expire This Friday

Options trading in the Bitcoin (BTC) and cryptocurrency ecosystem has become common nowadays and the volumes kept growing by the day.

Cryptocurrency exchanges are improving their products to capture this growing investment bet, as the volatility in the market provides for new opportunities in this niche investment alternative.

Options contracts permit investors and traders to buy a particular asset at an agreed price in the future. With options, one might have entered an agreement when Bitcoin was at $10,000 sometime in September 2020 to repurchase the coins at the exact amount after six months - which is this March when Bitcoin is trading well above $50,000. Such an investor would have made enough gains seeing the price has increased five-fold.

A variation of this investment move is seen in Bitcoin futures contracts and the difference between the two is that while futures mandates you to buy Bitcoin through a contractual agreement at the point of the contract expiry, options places no such obligation. From the trends documented by Blockchain.news, this liberty to either buy the asset or not can create wild price swings for Bitcoin.

As much as $6 billion worth of Bitcoin options are set to expire this Friday, March 26, and the actions of the contract holders can have a corresponding impact on the price of the Bitcoin in the coming days or weeks. If investors choose to buy Bitcoin at the point of the options expiry, there may be upward and positive pressure on BTC's price. An opposite trend will be ushered in if the options are not exercised and investors take profit.

The price of Bitcoin is currently falling and the “digital gold” asset is trading at $53,949.71, down 6.73% in the past 24 hours at the time of writing according to CoinMarketCap.