Why Friday’s $ 6 billion expiration date of Bitcoin and Ethereum may not move the market

After an incredible start to 2021, Ether peaked at $ 4,380 on May 12, but has fallen 55% since then. In contrast to the leading cryptocurrency, the Ethereum network faces competition from projects that do not rely on proof of work and therefore does not face congestion issues that cause transaction fees to skyrocket.

Whenever the market frustrates traders with a negative surprise, traders quickly seek external explanations for their failure to interpret the signals. In reality, however, on April 30, six weeks before the initial decline, there was a clear sign that China was concerned about crypto mining’s energy consumption.

On May 6, the chairman of the US Securities and Exchange Commission recently confirmed that Gary Gensler had opposed congressional oversight against increased regulatory oversight of the crypto space. To protect over-optimistic investors, however, similar promises have been circulating for more than four years.

Regardless of the many reasons behind the recent negative market developments, traders love to blame someone for their mistakes, and what could be better than the derivatives markets?

Cointelegraph becomes the first news outlet to analyze the expiry of $ 2.5 billion worth of Bitcoin futures, which may give the bears a $ 450 million head start if the price doesn’t reach $ 32,000 on June 25. Dollar holds. On June 12, Cointelegraph said that ether is $ 1.5 billion a month, options expiration would be a consequence – or break, as 73% of options would be worthless from neutral to bullish below $ 2,200.

Updated open interest numbers show $ 1.36 billion in open interest on ether options and other futures contracts valued at $ 500 million expiring on Friday. Meanwhile, the open interest in Bitcoin options has grown to $ 2.64 billion, while another $ 1.44 billion expires in the futures market.

To understand whether derivatives markets, mostly quarterly maturities, have such a significant impact on prices, investors need to evaluate past maturities.

December 2020 and March 2021 reflect different movements

Bitcoin started a strong rally in November 2020 and returned 75% gains before expiring in December.

Over 102,000 Bitcoin options expired on Christmas Day, but with no noticeable impact. Instead, the upward trend continued as Bitcoin gained 69% in 12 days.

On the other hand, March 2021 shows a very different price action. Bitcoin price fell 14% before the option expired, although it fully rebounded over the next four days.

It is worth noting that Federal Reserve Chairman Jerome Powell said on March 22nd, “Bitcoin is too volatile to be money” and “is not covered by anything”.

That same week, billionaire fund manager Ray Dalio voiced concerns about a “US Bitcoin ban”.

March, June and September 2020 shows no signs of devaluation before it expires

If March 2021 could provide a viable argument for dumping in advance, the opposite would have been the case in the previous year.

Bitcoin saw a 31% rally in the ten days leading up to its March 26, 2020 expiration date. The next day, however, there was a correction of 11%, which is possibly a reason for investors to invoke “manipulation”. However, the 45% drop in hash rate at this point partly explains the sell-off.

The June 26 expiration date is unlikely to have a material impact on the price, as Bitcoin was down 2% before the event and another 2% over the next two days. However, an exactly opposite pattern occurred in the September 2020 expiration, when Bitcoin rose 2% before September 25 and continued to rise 2% in the two days after.

Expired options and futures contracts cannot be considered bearish or bullish

As the data from five previous quarterly expiry times show, there is absolutely no evidence of a pump and sell move (or reverse) move before derivative events.

For investors and traders waiting for confirmation from the bottom, the answer likely lies in restructuring Bitcoin’s hash rate.

One should also explain China’s over-the-counter traders how to reset their fiat gateways following the recent nationwide crypto trading ban.

Bitcoin price bounced back a bit after falling below $ 29,000, but overall, the past month has not been generous for BTC and Ether (ETH). Bitcoin has failed to break the $ 40,000 resistance on multiple occasions, and the recent drop to a six-month low of $ 28,800 is a surprising sign for many investors.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risks. You should do your own research when making a decision.