Could the options market be the key to pushing Bitcoin back down to $ 50,000?

For Bitcoin, the recovery from the September 7 crash was a little more difficult than expected. However, the very reason that explains the chain of events that led to the 14.69% decline also dictates how Bitcoin can get back on its feet.

What happened on September 7th?

In the past 7 days, the entire market was unsettled. This has led to crashes, FUDs (e.g.

While this crash clearly affected the market, not many know that it was triggered as soon as and possibly because of the BTC price of $ 52,000.

Bitcoins down 14.69% | Source: TradingView – AMBCrypto

When Bitcoin hit that point, it marked a local high and hit a 4-month high. This raised concerns that the price might correct itself soon, and meanwhile liquidations began.

In line with the dominance of long liquidation, the market went through a short liquidation squeeze immediately before the sell-off. This squeeze accounted for 80% of all liquidations during this period.

The very next day, long liquidations rose to 68% and BTC fell $ 10,000 shortly afterwards.

Bitcoin long liquidations | Source: Glassnode

It also helped the eternal futures market’s open interest drop by over 30% as $ 4 billion worth of contracts closed in 1 hour. At the time of writing, it was around $ 9 billion versus $ 13 billion.

During this period, traders found this an attractive opportunity and hedged their positions. This pattern of increase in option volume during the sell-off has been constant since March, with the volume hitting $ 1.3 billion this time.

Bitcoin option volume | Source: Glassnode

Where is Bitcoin headed?

Along with the above-mentioned declines, there was a brief decline in funding rates, which have since returned to positive territory. However, this time the funding rate was significantly lower than during the recovery from the crash in May.

Importantly, this surge in positive sentiment works in favor of Bitcoin, as there are over 12.9,000 and 13.4,000 contracts bringing the price up to $ 50,000 and $ 100,000, respectively.

Bitcoin OI by strike | Source: Skew – AMBCrypto

However, given the price movement and network performance, $ 50,000 seems more likely right now.

While the chance that BTC will hit that price point this month is only 21%, the expiration of 45,000 calls and 25,000 puts contracts on September 24th will give us a clearer picture of where the price will be by October 1st .

Bitcoin options expiry | Source: Skew – AMBCrypto

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