Bitcoin Price Rallies to $9.6K as Record CME BTC Contracts Expiry Looms

Published at: May 29, 2020

Bitcoin (BTC) price continues to inch closer to $10,000, rallying 5.68% to reach $9,600 on May 28. After breaking out of the falling wedge pattern on Wednesday night, the top ranked cryptocurrency on CoinMarketCap pushed through $9,350, a level traders expected to present resistance and made a beeline for $9,500. 

Today’s rally brings Bitcoin price back to the $9,600-$9,800 zone where the digital asset traded from May 13 - May 20 and it also increases the likelihood of a return to $10,000. 

Interestingly, data from Cointelegraph and Skew shows a large number of BTC futures contracts, including $184 million in CME Bitcoin Futures scheduled to expire this Friday. 

Total BTC Options Open Interest. Source: Skew.com

Earlier this week Skew  tweeted: 

23k Bitcoin equivalent futures and 10k Bitcoin options are set to expire this Friday on CME. Approx 50% of open interest for each product. Watch the rolls!

Is today just another pump before the dump? 

As reported by Cointelegraph and Arcane Research, Bitcoin price tends to experience increased volatility around CME BTC futures expiry dates. In fact, Arcane Research found that after analyzing price behavior from January 2018 to August 2019, Bitcoin price dropped 75% of the time before futures expire. 

This means that traders will be closely observing Bitcoin price leading up to and after the expiry. According to Cointelegraph contributor Marcel Pechman:

To better gauge the potential impact of the upcoming expiry, traders should monitor CME open interest for the May contract. Investors typically roll over the position over the last few weeks. 

Pechman further explained that: 

If we break $10k, this adds buying power for call options but I like to monitor contango more than funding rate in order to see how the curve of next futures contracts is priced vs spot. In my opinion, the bigger the futures premium, the more bullish big investors are. 

Thus, as the expiry date for $328 million in BTC derivatives approaches, traders can expect more volatility. 

What’s next for Bitcoin?

Alongside institutional and larger sized investors who are demonstrably bullish at the moment, the short-term sentiment amongst retail investors is also shifting from bearish to bullish. 

Crypto Fear & Greed Index. Source: Alternative.me

The Crypto Fear and Greed Index shows that within the last two weeks traders’ sentiment has shifted from ‘fear’ to ‘neutral’. 

The daily chart shows that Bitcoin price has pushed above the lower trendline of the former ascending channel and the price is meeting some resistance at the VPVR high volume node at $9,675. 

BTC USDT daily chart. Source: TradingView

Since breaking from the falling wedge yesterday, BTC price has rallied 8.38% and at some point a retest of the $9,200-$9,300 level should occur. As of now the price continues to trade within a symmetrical triangle and a break above $9,800 would push the price above the triangle trendline and the high volume VPVR node located at the same level. 

The daily RSI is dropping down from 58 and the MACD looks set to converge with the signal line over the coming hours. A rejection at $9,700-$9,800 would raise the chance of the price dropping below $9,500 to retest the $9,200-$9,300 range which is near the 20-day moving average. 

If traders manage to push the price above the pennant trendline and clear the $9,800-$9,900 level, Bitcoin price has a good shot at rallying to $10,300 where the long-term descending trendline from the December 2017 all-time high is located. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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