100,000 BTCUSD options expiring in June, OI in Bitcoin Futures at an all-time high

The enormous number of options expiring in June turned a lot of heads towards itself. These contracts happened as early as March-April when BTCUSD was highly volatile.

Open Interest refers to the number of positions that are yet to be squared off. OI in Bitcoin Options refers to the trades between a buyer and a seller in anticipation of Bitcoin’s future price movement. These kinds of contracts have an expiration. 

The monthly contract that will expire on June 26 has the highest Open Interest. However, it should not be confused as a Bullish signal or a Bearish signal.

Significance of the 100k options on BTCUSD

The data compiled by Skew, a Bitcoin analytics firm, shows that the monthly June option has the highest number of Open contracts. Many of these trades happened as early as April. It was soon after the recovery of BTCUSD from the disastrous drop in March.

Trading in Futures contracts offers the following advantages:

  • Power of leverage
  • Higher possibility of profit
  • No blocking of capital if BTCUSD doesn’t move as anticipated

To put it into perspective, imagine someone going long on BTCUSD June Futures for $8,000, on March 11. The spot price of BTCUSD was as low as $3,850. 

This contract would have given the buyer the right to buy BTCUSD for $8,000 on June 26. Even though the spot price might be $9,800, the buyer of the contract can buy it for $8k by exercising the agreement. 

 

Why such a large number of active June contracts for BTCUSD

Volatile markets are better suited for trading rather than investing. During March, when BTCUSD was most volatile, several investors stayed away from buying Bitcoins. They traded in BTCUSD Futures, which allowed them to earn profits without needing to hold Bitcoins.

Here is the BTCUSD daily chart:

BTCUSD Daily Chart
BTCUSD Daily Chart

Therefore, the volatility gave rise to the enormous number of contracts and has no relationship with BTCUSD being Bearish or Bullish. 

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