What to expect from Bitcoin price as $3.4 trillion stock options set to expire on Friday


Share:
  • Stock options worth $3.4 trillion are set to expire on Friday, the largest volume for any September.
  • Increasing volatility could lead to price declines, with September being typically the worst-performing month for both the S&P 500 and Bitcoin.
  • Markets broadly expect no interest rate hikes by the Fed until the end of 2023, but a surprise could hit risk assets.

Market participants gear up for volatility-filled weeks ahead with a record stock expiry on Friday. $3.4 trillion stock options expire on September 15, days away from the US central bank’s policy announcement next week.

Also read: SEC accuses Binance US of failure to support probe, shifts focus to exchange’s custody arm

Friday’s record stock expiry could trigger downside volatility in Bitcoin

The expiry of $3.4 trillion worth of stock options marks a historic day in the market. Friday’s options expiry is significant for two key reasons: it is the highest dollar value expiry for September, and the month has been typically a negative one in terms of returns for both the S&P 500 and Bitcoin.

S&P 500 has closed lower than its opening price 10 out of the past 11 trading days in September. Bitcoin price has climbed 2.2% this month – the asset opened September at $25,942 and is currently trading at $26,517. Based on data from Coinglass, in the past three years, Bitcoin price yielded 3.12% (2022), 7.03% (2021) and 7.51% (2020) monthly losses in September, respectively.

Akash Girimath, technical analyst at FXStreet shared Bitcoin price performance in September in a recent tweet:

Bitcoin’s one-year correlation with the S&P 500 is 0.27 and this supports the thesis of similar reaction in both the index and the cryptocurrency.

BTC Pearson Correlation (30D)

BTC Pearson Correlation (30D)

Traditionally, options expiry coincides with choppy conditions in markets, and in Bitcoin’s case, it is likely that the event will trigger downside volatility in the price, marking another red September for the largest cryptocurrency.

There may be some residual weakness in the weeks following the expiry event, when market participants closely watch the US Federal Reserve’s policy announcement on September 19-20. 

97% chance of no rate hike by the Fed

According to the CME’s FedWatch tool, the market has priced in a 97% chance that the central bank will keep rates at their current level, 525-550 basis points. The number grew 5% from Tuesday, marking confidence among market participants.

Target rate probabilities for Fed's September 20 meeting on CME FedWatch

Target rate probabilities for Fed’s September 20 meeting on CME FedWatch

If the Federal Reserve surprises markets by raising interest rates on September 20 – an improbable outcome – it is likely to put pressure on Bitcoin price and catch BTC holders off guard, as borrowing gets expensive and BTC price rallies are typically fueled by leverage.

Bitcoin price is holding steady, close to the $26,500 level on Binance, at the time of writing.

Interest rates FAQs

What are interest rates?

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%.
If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

How do interest rates impact currencies?

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

How do interest rates influence the price of Gold?

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank.
If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

What is the Fed Funds rate?

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure.
Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.


Like this article? Help us with some feedback by answering this survey:



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.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Near Protocol Price Prediction: NEAR pumps 10% as investors envision another buy opportunity here

Near Protocol Price Prediction: NEAR pumps 10% as investors envision another buy opportunity here

Near Protocol (NEAR) price is trading with a bullish bias, with a sustained series of higher highs since the last week of January. With investors groping for discounted entry points, NEAR could correct before the next leg up.

More Cryptocurrencies News

Ethereum price teases with a breakout, eyes $3,200 milestone as ETH bulls show resolve

Ethereum price teases with a breakout, eyes $3,200 milestone as ETH bulls show resolve

Ethereum (ETH) price consolidation within the ascending parallel channel has lasted since October, with the Proof-of-Stake (PoS) token making multiple attempts to breakout. As it stands, Ethereum continues to outperform Bitcoin (BTC) with double the gains.

More Ethereum News

Solana Price Prediction: SOL could easily go all the way back to $79.49 low

Solana Price Prediction: SOL could easily go all the way back to $79.49 low

Solana (SOL) price is trading with a bearish bias, recording a series of lower highs and lower lows since mid-February. The downtrend has seen the Layer 1 (L1) token drop below the midline of the market range between $79.49 and $126.27.

More Solana News

BNB price eyes $400 as Binance Coin bulls keep showing up

BNB price eyes $400 as Binance Coin bulls keep showing up

Binance Coin (BNB) price has formed lower highs and lower lows over the past few days, but the bulls continue to maintain a strong presence in the market. BNB has also steadfastly shown strength despite the recent uncertainty in the market as altcoins awaited cues from Bitcoin (BTC) price.

More Binance News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis

BTC

ETH

XRP