Important takeouts:
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Traders cut bullish positions and signaled mixed market sentiment ahead of the $22 billion monthly Bitcoin option expiration date on Friday.
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The influx of Stablecoin premiums and Bitcoin ETFs has shown careful optimism, suggesting traders will seek profits in the short term.
Bitcoin (BTC) fell to its lowest level in more than three weeks, causing the liquidation of a leveraged bull position of $275 million. Traders are questioning whether the $22 billion BTC option looming Friday accounts for a DIP of under $109,000, and whether professional investors are expecting further price drops.
At Binance, top traders reduced long (bully) positions on Tuesday and Wednesday, driving a reduction ratio to 1.7 times, the lowest level in over 30 days. With Bitcoin falling below $112,000, these traders began to reversal the course, adding an upward exposure as the indicator slowly returned to 1.9 times in favor of the long.
Meanwhile, OKX’s whales and market makers are moving in the opposite direction, adding longs between Tuesday and Wednesday, betting that they will likely retain $112,000 in support. By Thursday, OKX’s short-to-short-term ratio had skyrocketed 4.2 times, reaching its highest in more than two weeks. However, the decline in Bitcoin to $108,700 caught these players off guard and forced them to reduce leverage with losses.
If the price falls below $110,000, Bitcoin put options will take a billion-dollar lead
Bearish bets from Bitcoin’s monthly options expired at UTC at 8am on Friday targeted the $95,000 to $110,000 range. If Bulls are unable to regain the $110,000 level by then, the Put (selling) option will earn you a billion dollar advantage.
However, some analysts hope that sales pressure will ease after expiration, as BTC derivatives have shown resilience in recent weeks and remain relatively stable despite recent price drops.
Bitcoin’s two-month futures premium compared to the spot market, which is stable at 5%, within the neutral 5% to 10% range. This indicates a limited appetite for bullish positions, but reflects that shorts are cautious and not aggressively betting on the negative. Open interest on Bitcoin futures has been strong at $79 billion, down 3% over the past two days, according to Coinglass data.
Additionally, Bitcoin Exchange Trade Fund recorded a net inflow of $241 million on Wednesday, supporting moderate optimism among investors. At the same time, concerns about the US labor market, mentioned by US Federal Reserve Chair Jerome Powell, continues. The Labor Bureau reported Thursday that continued unemployment claims for the week ending September 13 are relatively flat at 1.926 million.
Bitcoin is under pressure from potential US government shutdowns
Bitcoin is facing pressure from increased risk aversion for traders, particularly amid concerns about a potential US government shutdown. A memo from US President Trump’s Management and Budget Office (OMB) that Politico first reported, directed the agency to amend its plans ahead of the possibility that discretionary funds would expire on October 1st.
Stablecoin demand in China provides additional insight into trader positioning. Typically, strong interest in cryptocurrencies boosts stability, about 2% above the official US dollar rate. In contrast, discounts above 0.5% often show fear as traders withdraw from the crypto market.
Related: Bitcoin collapses at under $109,000, but data shows buyers are intervening
Currently, Tether (USDT) trades at a modest 0.3% premium compared to the official USD/CNY rate, suggesting a neutral market. This shows that some traders may be injecting capital into cryptocurrencies to take advantage of recent DIP, supporting people’s views that will be gained following the expiration date of the option on Friday.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.