TLDR
- Bitcoin’s drop to $109K leads to $275M in liquidations of bullish positions.
- Binance traders reduced long positions as Bitcoin fell below $112K.
- $22B Bitcoin options expiry Friday could ease current selling pressure.
- Bitcoin ETF inflows hit $241M amid cautious optimism before expiry.
Bitcoin’s price has recently fallen below $109,000, marking its lowest point in over three weeks. This decline has triggered $275 million in liquidations of leveraged bullish positions, as traders prepare for the $22 billion Bitcoin options expiry scheduled for Friday. Many are questioning whether this drop is linked to the upcoming expiry and what professional investors are expecting next. Market sentiment appears to be shifting, with varying actions taken by traders on different platforms.
Traders Adjust Positions Amid Price Drop
Bitcoin’s price decline has led to mixed responses among traders. On Binance, top traders reduced their long positions in the days leading up to the drop, causing the long-to-short ratio to decrease to 1.7x, the lowest in over 30 days. As Bitcoin fell below $112,000, these traders began adjusting their strategy, adding upward exposure and slowly bringing the ratio back to 1.9x in favor of long positions.
In contrast, traders on OKX initially increased their long positions, betting on the $112,000 support level. However, when Bitcoin fell to $108,700, these traders were forced to reduce their leverage, incurring losses. The fluctuating sentiment and shift in positioning highlight the uncertainty surrounding Bitcoin’s price movement and the potential effects of the upcoming options expiry.
Focus on Bearish Bets for Options Expiry
Ahead of Friday’s $22 billion Bitcoin options expiry, there is significant focus on bearish positions. Put options, which allow traders to sell Bitcoin at a predetermined price, are concentrated between the $95,000 and $110,000 range. If Bitcoin fails to recover and stay above the $110,000 mark before the expiry, put options could gain a $1 billion advantage.
Analysts suggest that the expiry event could bring some much-needed stability to the market. As Bitcoin derivatives have shown resilience in recent weeks, some expect the pressure to ease once the expiry is complete. Despite the recent price dip, open interest and funding rates for Bitcoin futures remain relatively stable, signaling a neutral outlook for the market.
Stable Bitcoin Futures Market and ETF Inflows
Despite the price drop, Bitcoin’s futures market shows stable sentiment. The premium for Bitcoin futures relative to the spot market has held steady at 5%, which is within the neutral 5% to 10% range. This stability suggests that there is not a strong appetite for either bullish or bearish positions. Additionally, Bitcoin futures open interest remains robust at $79 billion, reflecting sustained market engagement.
Furthermore, Bitcoin exchange-traded funds (ETFs) have seen a notable increase in inflows. On Wednesday, Bitcoin ETFs recorded $241 million in net inflows, indicating moderate optimism among investors. This positive movement suggests that some traders may be using the current dip as an opportunity to enter the market before potential gains following the options expiry.
Risk Aversion and External Factors Affecting Bitcoin
The pressure on Bitcoin’s price also stems from rising risk aversion among investors, partly due to concerns about a potential US government shutdown. As the government nears a funding lapse on October 1, market participants are becoming more cautious. A memo from the US Office of Management and Budget (OMB) instructed government agencies to prepare for the possible shutdown, adding to the uncertainty in financial markets.
Additionally, stablecoin demand in China reflects the cautious market sentiment. Tether (USDT) is currently trading at a slight premium of 0.3% above the official USD/CNY rate, suggesting that traders are maintaining a neutral stance. The stablecoin market’s movements provide further insight into traders’ positioning in the crypto space, with some potentially looking to capitalize on the current dip as they await further price developments.
