Crypto faces a critical test this week as the quarterly options expiry collides with a key U.S. inflation reading, a convergence that could determine whether the rally gains momentum or falters.<\/p>\n
Roughly, $22.3 billion in crypto options will expire as the third quarter comes to a close on Friday, according to options exchange Deribit<\/a>. Out of which, Bitcoin options with a notional value of $17.06 billion are set to expire.<\/p>\n Greg Magadini, director of derivatives at options analytics platform Amberdata, told Decrypt that the current Bitcoin expiration cycle is “the largest on the board.”<\/p>\n Dealer positioning shows “a lot of short gamma at $109,000 and $108,000,” he said, pointing to a situation that requires those price levels to hold to prevent a sharp move downward.<\/p>\n Bitcoin\u2019s short-term moves depend heavily on options dealers and large institutions that hedge their positions in real-time. Their exposure to \u201cgamma,\u201d a measure of how quickly hedges must adjust, can either amplify price swings or help steady them.<\/p>\n A short gamma position means dealers could be forced to sell into a declining market, exacerbating a drop.<\/p>\n US Dollar Bounces, Gold Pauses Rally: What\u2019s Next for Bitcoin?<\/a><\/p>\n Data shows that $108,000 has become critical for Bitcoin traders. A failure to hold above this level could trigger an automated selling cascade, independent of the August Core PCE release, Decrypt was told.<\/p>\n Considering the dealer\u2019s short gamma positioning and volatility around 35%, Magadini expects a drop below $108,000 to trigger a \u201ctwo standard deviation move to $96,000,\u201d especially if the markets are weak.<\/p>\n Bitcoin is currently trading at $109,100, having clocked a 3.8% loss on Thursday. In total, the top crypto has shed 6.50% over the past week, CoinGecko data shows.<\/p>\n All eyes are now on the Core PCE release, scheduled for 8:30 a.m. ET today, which remains sticky around 3%. The month-over-month forecasts sit around 0.2%, slightly lower than last month\u2019s 0.3%.<\/p>\n A hotter-than-expected release could strengthen the dollar\u2019s recent bounce<\/a> and exacerbate Bitcoin\u2019s ongoing correction, experts previously told Decrypt.\u00a0\u00a0<\/p>\n