Roughly $11 billion in Bitcoin options are set to expire on October 30, potentially igniting significant price volatility in the cryptocurrency markets. This expiration coincides with heightened hedging activities around current price levels and the upcoming U.S. midterm elections, both of which are poised to impact Bitcoin’s market dynamics. Concurrently, robust inflows into U.S. spot Bitcoin ETFs and a decrease in sales by long-term holders are providing support to the digital asset.
Focus Shifts to Key Price Levels with Expiring Options
According to a Bloomberg report dated October 29, the contracts approaching expiry represent about one-third of the total Bitcoin options outstanding on Deribit. Notably, call options with strike prices of $90,000, $95,000, and $100,000 dominate the market, though they are likely to expire worthless if prices remain unchanged. Market participants are concentrating on options near the current trading range and their corresponding hedging strategies.
Adam Hames, President of Tesseract Group Asset Management, notes that approximately 70% of the gamma risk of expiring options is concentrated between $75,000 and $82,000. Gamma measures the change in hedging requirements as prices fluctuate. Should market makers become net sellers of these options, their hedging activities during declines could exacerbate losses between $75,000 and $78,000. Additionally, the number of put options below $80,000 surpasses call options by more than double.
Caroline Mauron, Co-Founder of Orbit Markets, anticipates option sellers will slow the issuance of new contracts until the outcomes of the November 3 midterm elections are clear, potentially reducing the option supply that typically curtails price swings. Wincent Senior Director Paul Howard expects a marked increase in volatility in November, after historically low levels persisted over the past year.
The election results are also being monitored for their implications on the progression of pro-crypto policies championed by the Trump administration. According to the Bloomberg Markets Pulse survey, the median year-end Bitcoin forecasts stand at $90,800 if Republicans retain majorities in both Congressional chambers and $76,450 should Democrats gain control of both. A split control scenario estimates a price of $84,100.
ETF Inflows Persist as Ethereum Funds Witness Outflows
Data from Farside Investors, released on October 29, reveals that U.S. spot Bitcoin ETFs recorded net inflows of approximately $137 million on October 28, marking a three-day inflow streak. BlackRock’s IBIT fund accounted for nearly the entire sum with $136 million, while Bitwise’s BITB fund saw an addition of $1.3 million. Other funds reported no significant net movement.
In contrast, spot Ethereum ETFs experienced net outflows for the third consecutive trading day, totaling around $21 million. BlackRock’s ETHA fund led the outflows with $44.8 million, while Fidelity’s FETH fund, Grayscale Mini ETH, and Morgan Stanley’s MSSE fund saw inflows of $18.8 million, $3.6 million, and $1 million, respectively.
On-chain data corroborates a reduction in Bitcoin’s selling pressure. CryptoQuant analyst Axel Adler Jr. reported a 22% weekly decrease in the 30-day moving average of long-term holders’ distribution volume. Despite Bitcoin trading above these investors’ average cost, unrealized profit margins are narrowing. Adler emphasizes the need to monitor the shrinking profit buffer despite slowing sales activity.
Bitwise Raises Bitcoin Price Target to $1.6 Million by 2036
While short-term volatility risks persist, Bitwise has revised its 2036 Bitcoin price target upward from $1.3 million to $1.6 million. In a report titled “2027 Bitcoin Long-Term Capital Market Assumptions,” the company projects an annual compound return of 34.3% for Bitcoin over the next decade. Comparatively, U.S. equities and private equity investments are expected to yield annual returns of 6.7% and 10.8%, respectively.
The revision is anchored in heightened projections of markets Bitcoin could permeate. Bitwise has elevated its 2036 global store of value market estimate from $91 trillion to $110 trillion and its institutional investment market estimate from $216 trillion to $303 trillion. However, assumptions about Bitcoin’s share of these markets remain unchanged.
Bitwise’s $1.6 million base case scenario hinges on Bitcoin capturing 25% of the store of value market and 1% of institutional assets by 2036. Pessimistic projections put the target at $130,686, while optimistic scenarios forecast $3.67 million. The firm estimates that 1–5% of the $147 trillion managed by institutional investors, as per Boston Consulting Group forecasts, allotted to Bitcoin could engender demand between $1.5 trillion and $7.4 trillion, countered by an annual new supply from mining of around $14 billion.
Matt Hougan, Bitwise’s Investment Director, cites limited losses during recent corrections, regulatory progress, and heightened demand for store of value assets like gold as reasons reinforcing optimistic long-term outlooks. The firm also revised its average volatility forecast for the coming decade from 32.9% to 27.8%. Research Head Ryan Rasmussen anticipates reduced volatility with increased institutional participation, although significant downturns in Bitcoin remain possible.
While ETF inflows and diminishing long-term sales support Bitcoin, the concentration of investments in IBIT indicates a lack of widespread fund demand. In the short term, price movements below $80,000 are crucial; hedging sales from market makers may intensify a decline within the $75,000 to $78,000 range.
