Bitcoin Price Reverses Course Ahead of CME Futures Expiry

After a positive start to the week, bitcoin’s rally fizzled on Tuesday, as the bears reaffirmed their stranglehold on the market ahead of a key futures expiry on Friday. Although bitcoin futures have had a stabilizing effect on the market, price action tends o be volatile in the days leading up to a contract’s expiration.

BTC/USD Update

The bitcoin price reached a session low of $3,562 on Coinbase before recovering modestly later in the day. At the time of writing, the San Francisco-based exchange was quoting a BTC/USD price of $3,704, down 3.7% from the previous day. On Bitfinex, bitcoin is trading hands at $3,825, where it was down 1% from the previous session.

Aggregate data courtesy of CoinMarketCap shows an average price-per-coin of $3,741, having declined 4.1% over the previous 24 hours. At current values, the leading digital currency has a total market cap of $65.1 billion.

Exchange-traded volumes reached $6.6 billion over the past 24 hours, with derivatives platform BitMEX processing nearly 36% of transactions. Spot exchanges like Binance and CoinBene each processed 3% of the daily turnover via BTC/USDT trades.

CME Futures Expiration

CME Group’s November 2018 bitcoin futures contract (BTCX18) is scheduled to expire on Friday, signaling to investors that more volatility could be on the horizon. As Fundstrat’s Tom Lee once observed, bitcoin’s price tends to fall dramatically in the ten days leading up futures expiration. Although he was referring specifically to the CBOE futures contract, which expires mid-month, a similar trend can be observed for the CME product. Futures contracts offered by both clearing houses surged last week to their highest level on record as traders increased their short positions in the wake of the bitcoin cash hard fork.

The BCH hash war resulted in a permanent split between two competing chains – bitcoin cash ABC and bitcoin cash SV. The former has retained the “bitcoin cash” moniker as well as the BCH symbol, while the latter has begun trading on major exchanges. As of Tuesday, bitcoin cash was the fourth largest cryptocurrency by market cap and bitcoin SV had retained the no. 9 spot.

The fallout from the hard fork has left investors struggling to determine whether a new bottom has formed or whether this is the start of an even bigger downturn. Activity in the futures market shows no shortage of investors looking to profit from bitcoin’s decline. However, until now, the mid-$3,500 range has held up fairly well.

Bottom-pickers should keep a close eye on the $3,200-$3,500 region. If the bulls manage to defend this level from further losses, it could signal an attractive buying opportunity for speculators as well as long-term holders who are investing in bitcoin’s future.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi