Bitcoin Trims Losses Ahead of Major Options Expiry

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Following yesterday’s selling, a summary of the situation from crypto derivatives exchange Deribit also gave some traders hopes that the worst is already behind, and that a relief rally could be coming next.

Despite the recovery seen so far, however, the bitcoin market is still on the edge for the upcoming options expiries this Friday, with close to BTC 70,000 in options contracts set to expire across all major exchanges, per data from Bybt.com. 

At current prices, the expiring contracts are worth some USD 3bn, making it one of this year’s largest expiry days.

Large amounts of options expirations have on occasion caused increased volatility in the spot markets, although this is by no means a certain outcome.

But although short-term relief can already be felt in the bitcoin market, longer-term signals based on on-chain metrics are potentially another cause for concern for bitcoin holders.

According to analytics firm Coin Metrics’ State of the Network report released today, bitcoin’s market value to realized value (MVRV) ratio – described as “one of the most accurate on-chain indicators for gauging BTC market cycles” – has now dropped to about 1.73 after reaching a high of 1.94 when bitcoin spiked above USD 52,000.

A MVRV below 2 has historically “signaled bear territory,” Coin Metrics said, without going into further detail about what this might mean for the near-term.

In either case, Mike Novogratz, CEO of Galaxy Digital, claims he's not nervous about the selloff: 

Meanwhile, the major financial ratings agency S&P Global Ratings last night downplayed the risks posed by a potential default in the property development giant China Evergrande, which reportedly owes more than USD 300bn. 

According to the agency’s assessment of the situation, the Chinese government will not provide “direct support” to China Evergrande unless there is potential for “far-reaching contagion” that poses “systemic risks to the economy.”

“We believe the Chinese banking sector can digest an Evergrande default with no significant disruption, although we will be mindful of potential knock-on effects,” the ratings agency said.
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Learn more:

- Bitcoin & Crypto Drop Alongside Stocks On China's Evergrande Spillover Risks
- Why Bitcoin Likes a Hard-On Environment 

- Analysts Urge Caution as Golden Cross Appears in Bitcoin Chart
- Bitcoin May Surpass USD 66K in 2021 and USD 400K by 2030 - 'Panel of Experts'

- Market Says 'Meh' as Largest Ever Bitcoin Options Expire
- Bullish Options Data Fuels Speculations on New Bitcoin Rally