TL; DR
Full story
Good news!
New upward momentum is expected to hit the crypto market tomorrow.
This is why:
Friday is the last trading day of the quarter – and traders have a habit of buying options that expire on these days.
Options trades are exactly what they sound like:
An option to buy or sell an asset (in this case Bitcoin and/or Ethereum) at a certain price in the future. Options to buy an asset are known as ‘calls’ while options to sell are known as ‘puts’.
(Why? No idea ¯\_(ツ)_/¯ probably because it makes traders sound smart).
Currently, about 27% ($2.7 billion worth) of the $10 billion worth of options that will expire are in the money (i.e. profitable), meaning they will be acted upon – resulting in a wave of buying/selling.
The key question in these types of cases is:
Which of the two profitable options constitutes the majority: the options to buy (call), or to to sell (sets)?
Because if the buy orders are the dominant ones, that means we will see a lot of buying pressure (which helps push the price up). While if sell orders are the majority, the opposite will happen.
But wait! It gets even more confusing!
In this web of financial back and forth, traders can sell their options to other traders.
And by looking at which of the two options is most in demand on the secondary market, we can get an idea of whether there will be net buying or selling tomorrow.
As promised above, the good news is:
At the time of writing, buy options are winning that race.
This could have changed by the time you read this (in fact, news just broke that the US government is about to sell off some seized BTC)…
But for now we are in good shape!