BTC Investors Are Buying the Dip But Watchout, Options Expiry Are Coming
- Bitcoin addresses holding 0.1+ coins breaks ATH set yesterday as price moves north of $5,800
- Bitcoin futures and options set to be expired next week
For the past few days now, bitcoin is showing the signs of decoupling from the other risky assets like gold as the digital asset jumped to $5,920, up 8.13%, with more than $2 billion worth of bitcoin exchanging hands-on top ten exchanges with real volume.
Another positive movement is the number of addresses holding over 0.1 BTC just hitting an all-time high yet again. Just a day before, the addresses reached a peak of 2,919,003 only to surpass this with 680 new addresses.
Looks like people are buying the dip and stacking some sats. Bitcoin HODLer Net Position Change is also showing that investors are accumulating. The metric has been positive during the recent BTC price dump, which means long term investors “accumulating discounted BTC and increasing their positions.”
#Bitcoin HODLer Net Position Change has been positive during the recent price dump.
This means long term investors have been accumulating discounted $BTC and increasing their positions.
— glassnode (@glassnode) March 17, 2020
Also, according to MVRV, this is the “best time to accumulate BTC at a relatively discounted price” as it drops below one for the fourth time in Bitcoin’s history.
Market Dynamics to Change
However, as bitcoin surges and altcoins jumping even higher, with Dash (19.49%), IOTA (15.50%), Chainlink (13.47%, BAT (11.14%), and Cardano (11.02%) leading the market gains, bitcoin futures and options are soon to be expired.
While next week, on the last Friday of the month, CME Bitcoin futures will expire, nearly two-third of outstanding options will expire over the next two Fridays.
Nearly 2/3 of outstanding bitcoin options will expire over the next two Fridays
Tomorrow is also the first quarterly expiry of the year for equity markets globally – this one will be watched closely as a lot of positions will drop off potentially impacting market dynamics pic.twitter.com/8dnyCXa39q
— skew (@skewdotcom) March 19, 2020
Bitcoin options volume, however, has been going down since March 12 sell-off, the same as bitcoin futures contracts.
Strength of the infrastructure under question
Late last week, bitcoin plunged to its worst day in seven years as worries over the economic hit from the coronavirus (Covid-19) spread from stocks, oil, bonds, gold, to cryptocurrencies.
This resulted in a dramatic spike in volatility and volumes and the infrastructure created under this strain.
As we reported, Ethereum network congested by getting overwhelmed causing a sharp increase in gas prices and forced liquidations on DeFi projects like MakerDAO.
In the Bitcoin market, futures exchanges saw a rush of triggered liquidations of leveraged positions that fueled the pressure on price. Spread between spot and futures exchanges also jumped. This resulted in at least two major exchanges going down.
While New York-based Gemini went offline for less than 90 minutes and Seychelles-based BitMEX went down twice for a total of 45 minutes. A spokeswoman for Gemini said,
“In an abundance of caution, and to protect the integrity of our marketplace, we paused the market to resolve the issue and ensure all market services were back online in a healthy state prior to reopening.”
As for BitMEX, the exchange suffered two DDoS attacks that day, attackers waited for the right moment and overwhelmed the platform “during a moment of peak volatility.”
This has the market concerned about the strength of the infrastructure.“Volatility is not an issue — it’s whether the technology can deal with the volatility.” said Denis Vinokourov at crypto exchange BeQuant.
“The tech is important. You’re inviting traditional, big firms to trade on platforms that may not be able to withstand the amount of trading.”