Bitcoin Sees $9.6K Rally as Record CME Contracts Expiry Draws Close

Bitcoin’s price has been coming ever-closer to the $10,000 mark, having managed to rally 5.68% to reach the $9,600 mark on the 28th of May, 2020. The market managed to break free from the falling wedge pattern on Wednesday night, with the world’s oldest cryptocurrency managing to push through the $9,350 mark, which was level traders had long since expected to present resistance. Afterward, it made a straight beeline for $9,500

Slowly Edging Back to $10,000

This rally brings Bitcoin’s price back to the range of $9,600 and $9,800, where it had been previously traded for within the week of the 13th of May to the 20th of May. Furthermore, the closer to $10,000 the currency is trading, the higher the chances of the currency of breaking past that hard barrier.

Another key thing to take into consideration is the sheer number of BTC futures contracts set to expire on Friday. This includes $184 million Bitcoin futures within CME, and was provided by sources like Skew.

Threats Of Increase Volatility Amid Expiry

Skew tweeted earlier this week, explaining that 23,000 in Bitcoin equivalent futures, as well as 10,000 Bitcoin Options, have been set to expire on Friday within the CME. That’s an approximate 50% of open interest for each product, according to the tweet. Skew subsequently urged everyone to “Watch the rolls!”

It’s already been established for some time, now, that the Bitcoin price tends to experience a large increase in volatility when the BTC futures of CME expires. Arcane Research, in particular, discovered after some price analysis during January of 2018 and August of 2019, BTC managed to drop 75% of the times when the expiry date of BTC futures arrived.

What this means, however, is that traders will be keeping a close eye on Bitcoin’s price, both leading up to, then after, the expiry of these futures.

Experienced opinions

Pechman explained that traders have to monitor the open interest for CME for the may contract in order to better determine price movements on the upcoming expiry. Typically, investors roll over the position during those last few weeks.

Pechman went further, explaining that BTC breaking past $10k will add a lot of buying power for the call options. However, he stated that he personally enjoyed monitoring contango over the funding rate, saying he better sees how the curve of the next futures contracts is priced for a Bitcoin trader, as opposed to spot trading. He stated that he’s convinced that a more significant futures premium signifies a more bullish investor sentiment, at large.