- The data on the open interest for Bitcoin options implies a spike of volatility at the end of September.
- The price may retreat to $9,000 before it starts a long-term recovery towards $12,000.
Massive open interest in BTC options signals that the market may go wild into the end of September. The analytical data provider Skew noted a big cluster of the open interest in Bitcoin options with the expiry date at the end of the month, promising a spike of volatility.
An open interest (OI) is an aggregate number of so-called open contracts on the market. It reflects market activity; however, it is neutral in terms of market sentiments. Basically, this indicator shows the potential strengths of the market movements but says nothing about the future price direction. Who has better chances to have the upper hand in the September battle between Bitcoin bulls and bears? Let's find it out.
Kraken sings September blues
The recent report published by the cryptocurrency exchange Kraken implies that Bitcoin's volatility will be decreasing in September, based on the historical data.
If history is any indicator of the future, bitcoin's volatility is likely to trend lower in the month ahead. September's 9-year average and median volatility of 61% and 45%, respectively, is the lowest among all other months.
Apart from that, the exchange experts believe that September may become the worst month for Bitcoin with an average return of -7%. If those expectations are correct, BTC may retest $9,000 by the end of the month.
Meanwhile, the S2F model paints a different picture, where Bitcoin is gearing up for a strong rally towards $18,000 by October and $31000 by the end of the year. Other signals of the growing bullish pressure include the increased stablecoins inflow to cryptocurrency exchanges. Read more details here.
Let's have a closer look at the long-term charts to access the technical stay of play and define BTC's pivotal level.
BTC/USD: The technical picture
On a weekly chart, BTC/USD is moving in an upside-looking channel. The price reached its upper boundary in August and, after numerous breakthrough attempts, reversed to the downside. The channel's lower line is currently at $9,500, and the price may retest it before the next bullish leg. If it gives way, the sell-off may be extended towards $9,000, reinforced by the weekly SMA50.
BTC/USD weekly chart
Intotheblock's data on the market positioning also implies that the bears face stiff resistance in the area of $9,500-$9,000 as a cluster of over 3 million addresses holding 2.8 million BTC has a breakeven point around those levels. This massive supply from the traders who might seek to defend their positions before they move to the out-of-the-money cohort has the potential to slow down the bears and reverse the market.
Meanwhile, we won't have any significant resistance on the way to the North until at least $12,000-$12,500. There is a small barrier in the area of 10,500-$10,750. It coincides with the upper boundary of the recent consolidation range at $10,500. As we have previously mentioned, as the sustainable move above this resistance level will take the price towards the broken upside trendline and the daily SMA50 at $11,100, the next focus is on the above-mentioned $12,000.
BTC/USD daily chart
To conclude: A period of low volatility that followed a sharp sell-off at the beginning of September may result in a roller-coaster move at the end of the month. While it is hard to give long-term price targets for the pioneer cryptocurrency, the technical and on-chain data implies that the price may resume the recovery towards $12,000-$12,500 once $10,500 is cleared. On the other hand, the local support comes at $9,500 and followed by $9,000. The price may retest this supply area before the recovery is resumed. A sustainable move below $9,000 will negate the immediate bullish forecast and increase the chances of a deeper correction.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.