Could the options market be the key to pushing Bitcoin towards $ 50k again?
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Could the options market be the key to pushing Bitcoin towards $ 50k again?

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

What happened on September 7th?

The entire market has been volatile over the past 7 days. This led to disruptions, FUDs (like the Litecoin-Walmart “partnership”) and more investors waiting for their losses to turn into profits again.

While this crash has clearly impacted the market, not many people know that it happened immediately and possibly due to the fact that BTC reached $ 52K.

Fall of bitcoin by 14.69% | Source: TradingView – AMBCrypto

When Bitcoin reached this point, it marked a local top and set a 4-month high. This raised some concerns that the price could soon begin to correct, and as soon as that happened, liquidation began.

In line with the prevalence of a long liquidation period, the market experienced a short liquidation squeeze just prior to the sale. This squeeze accounted for 80% of all liquidations during this period.

The very next day, the number of liquidated long positions rose to 68%, and shortly thereafter, BTC fell by $ 10,000.

Liquidation of Bitcoin Long | Source: Glassnode

It also contributed to more than 30% drop in open interest in the perpetual futures market as the $ 4 billion contracts were closed in 1 hour. At the time of writing, it was around $ 9 billion compared to $ 13 billion.

During this period, traders found this an attractive opportunity and hedged their positions. This pattern of sharp increases in stock options during the sell-off has persisted since March, this time reaching $ 1.3 billion.

Bitcoin Options Volume | Source: Glassnode

So where is Bitcoin heading?

Along with the aforementioned drop, there was a short-term decline in funding rates, which have since turned positive again. However, the funding rate this time was significantly lower than during the recovery from the crash in May.

It is important that this rise in positive sentiment will play in favor of Bitcoin, since there are more than 12.9 thousand and 13.4 thousand contracts, for which the price will reach 50 thousand and 100 thousand dollars, respectively.

Bitcoin OI strike | Source: Skew – AMBCrypto

However, at the moment, if you look at the dynamics of prices and network performance, it is more likely that $ 50 thousand.

Although the chances of BTC hitting this 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 Expiration | Source: Skew – AMBCrypto

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