1/ Going into this month/quarter/year-end expiry on 25 Dec we can expect to see some volatility, considering the magnitude of this quarter's rally as well as the expected record open interest for all derivative markets across the board in both options & futures pic.twitter.com/rRn5ztuRoz
Derivatives contracts often expire at the close of each month on the final Friday. Quarterly and year-end closes are also of great importance. Due to the fact that the crypto market never sleeps, and the holiday just so happening to fall on a Friday this December, it coincides with an expiry of epic proportions.
Derivatives contracts like futures and options have an expiration date, in crypto, the stock market, and elsewhere. When these contracts are up, buyers and sellers are out in droves resulting in surges in intraday volatility in the days leading up to, during, or post expiry.
With the Q4 rally so substantial in terms of ROI, the quarterly contracts are especially noteworthy. Q4 2020 performed well but was an order of magnitude less profitable than Q4 2017 as the asset’s bull market ran dry.
The same levels could once again play and important role in future price action | Source: BTCUSD on TradingView.com
Following the peak, the price of Bitcoin pulled back $9,000 in a single week, eventually falling from just under $20,000 to under $6,000 less than two full months later.
What will this Christmas bring to the cryptocurrency market?