With $5.8 billion in options contracts nearing expiration, can Bitcoin hold its key levels?

Under the influence of an impending $5.8 billion options contract expiry,Hong Kong foreign exchange market dealers Bitcoin recently broke through the psychological threshold of $65,000, attracting significant market attention. Analysts warn that the expiry of these options may trigger substantial volatility in the cryptocurrency market.

Chris Newhouse, Head of Research at Cumberland Labs, stated that if Bitcoin falls below $65,000, it could lead to a sharp decline, whereas continued strength above this level may trigger a rebound. He mentioned, "Bitcoin is currently at a critical juncture of $65,000. It either breaks through and sustains this level or faces the risk of a substantial pullback."

On Thursday, Bitcoin surged 3.7% to $65,826, hitting a new high since July 30, though it subsequently pulled back. Meanwhile, lower liquidity tokens stood out, with Dogecoin rising by more than 9%, and Solana and Avalanche up 5% and 6.5%, respectively, indicating strong demand for smaller cryptocurrencies in the market.

In the options market, traders are facing significant decisions as the $5.8 billion contracts expire. According to data from crypto derivatives exchange Deribit, about 20% of the expiring contracts are in-the-money options, which could lead to greater market volatility on the expiry date. CEO Luuk Strijers noted, "Such a large-scale options expiry could increase market activity and even impact price trends."

Additionally, open interest is clustered around key levels such as $65,000, $70,000, $90,000, and $100,000, potentially becoming focal points for market trading. Vertex CEO Darius Tabai pointed out that due to "gamma hedging," noticeable volatility may occur when the market approaches $60,000 and $65,000. This phenomenon is because traders need to buy or sell a large number of options to manage their risk exposure, causing significant market fluctuations.

Historically, Bitcoin faces strong resistance in August and September, and the current market reaction once again confirms this trend. As more investors enter the options market, liquidity and volatility are likely to increase.

In summary, with the expiry of $5.8 billion options contracts, the Bitcoin market is facing a critical test. Investors should closely monitor the performance of the crucial support level at $65,000, which may determine the market's direction in the coming weeks.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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