Why the $6B expiration of Bitcoin and Ethereum on Friday may not affect the market

After an incredible start in 2021, Ether reached a peak of $4,380 on May 12, but has since fallen by 55%. Unlike leading cryptocurrencies, The Ethereum network faces competition from projects that do not rely on proof-of-work, So it will not face the bottleneck problem that causes soaring transaction costs.

Whenever the market disappoints traders with a negative surprise, traders will quickly seek external explanations for their failure to explain the signal.But in fact, there is a clear sign that China pays attention to the energy consumption of crypto mining It came out on April 30, six weeks before the initial price collapse.

On May 6, the recently confirmed chairman of the US Securities and Exchange Commission Gary Gensler (Gary Gensler) will Provide more supervision for the encryption fieldHowever, in order to protect overly optimistic investors, similar promises have been circulating for more than four years.

Regardless of the many reasons for the recent poor performance of the market, traders like to blame someone for their mistakes. What better scapegoat than the derivatives market?

Cointelegraph is the first news media to analyze the expiration of USD 2.5 billion Bitcoin futures, and may give If the price fails to stay at US$32,000, it will lead by US$450 million June 25. On June 12, Cointelegraph stated that the expiration of the option of 1.5B USD per month for Ether will be a moment of success or failure, because 73% of neutral to call options are worthless under $2,200.

The updated open interest data shows that $1.36 billion of open interest in ether options and another $500 million in futures contracts will expire on Friday. At the same time, the open interest of Bitcoin options has increased to 2.64 billion US dollars, and another 1.44 billion US dollars will expire in the futures market.

To understand whether the derivatives market (mainly quarterly maturity) has such a significant impact on prices, investors need to evaluate past maturities.

December 2020 and March 2021 reflect different trends

In November 2020, Bitcoin began a strong rebound, rising by 75% before expiration in December.

Bitcoin prices expire in December 2020 and March 2021. Source: TradingView

More than 102,000 Bitcoin options expire on Christmas Day, But there is no obvious impact. Conversely, as Bitcoin subsequently rose another 69% in 12 days, the bull market trend continued.

On the other hand, March 2021 showed a completely different price trend. Bitcoin price plummeted by 14% before the option expired, but recovered completely within the next four days.

It’s worth noting that on March 22, Jerome Powell, Chairman of the Federal Reserve Board Say, “Bitcoin fluctuates too much to become a currency” and “has no support.”

In the same week, billionaire fund manager Ray Dalio expressed concern about the possible “US Bitcoin ban.”

There are no signs of selling before expiry in March, June and September 2020

If March 2021 could have established a possible justification for dumping activities before the expiry date, then the previous year was faced with the opposite movement.

Bitcoin prices expire in March, June and September 2020. Source: TradingView

In the ten days before expiration on March 26, 2020, the Bitcoin bull market rose by 31%. However, an 11% correction occurred the next day, so it may establish a reason for investors to invoke “manipulation.”however 45% hash rate drop around date Partly explains the sell-off.

The expiration on June 26 does not seem to have a significant impact on the price, as Bitcoin fell by 2% before the event and fell by 2% in the next two days. However, the exact opposite pattern appeared when it expired in September 2020, when Bitcoin rose by 2% before September 25, and continued to rise by 2% in the next two days.

Expiry of options and futures cannot be considered put or call

As shown by the data from the previous five quarters, there is absolutely no sign that there will be skyrocketing and plummeting (or reverse) movements before the derivatives event.

For investors and traders waiting for confirmation of the bottom, the answer may lie in the reorganization of Bitcoin’s hash rate.

After the recent nationwide ban on cryptocurrency trading, Chinese over-the-counter traders should also re-establish their legal gateways.

Bitcoin prices rebounded slightly from a sharp drop of less than $29,000, but in general, the past month has not been generously Bitcoin And ether (Ethereum). Bitcoin has repeatedly failed to break the resistance level of $40,000, and its recent drop to a six-month low of $28,800 is an alarming sign for many investors.

The views and opinions expressed here only represent Author It does not necessarily reflect the views of Cointelegraph. Every investment and transaction involves risks. When making a decision, you should conduct your own research.