Historically, activity around monthly Bitcoin (BTC) futures and options expiration has been blamed for weakening upward momentum. Several studies conducted in 2019 showed that the average bitcoin price is 2.3% 40 hours prior to the settlement date for future contracts on the Chicago Mercantile Exchange.
However, as Cointelegraph reported in June 2020, there was no effect. While 2020 appears to have dismissed the potential negative impact of CME expiration, the current year appears to support that theory so far. Bitcoin’s price was suppressed before the futures and options expired in the first three months of 2021.
Return Bitcoin before and after CME expires, USD Source: TradingView
Some investors and traders note that Bitcoin’s spectacular rally after recent expiration dates for futures and options is becoming a trend.
BTC is effectively accumulating in the days following the expiration date, but the expansion of this analysis shows a less than satisfactory trend.
Three consecutive events that show no direction
The past 13 months haven’t been as impressive for Bitcoin as the cryptocurrency is up 788%. August 2020 turned out to be the worst month as BTC showed a negative trend of 7.5%. Thus, choosing random starting points over the course of the month is likely to show a similar positive trend.
For example, if you use the “last quarter” lunar phase as an alternative, the chances of making a draw after each event are very high.
Bitcoin dynamics after last quarter moon, in US dollars. Source: TradingView
As explained above, Bitcoin has already been collected after five of the last six cases. The only conclusion may be that positive trends are the rule rather than the exception during rallies.
While there may be some explanations for Bitcoin’s weak performance at the end of the month, these are only hypotheses.
While market makers and arbitrage services can benefit from price suppression after the rally, other forces, including the use of long positions in futures and long-holders, will balance this.
Bitcoin has not depreciated in three of its last seven expiry periods.
Hence, it makes more sense to analyze the probability of price extinguishing before expiration, rather than seeking an explanation in a meeting during the beef market.
Bitcoin performance before and after CME expires in 2020, in US dollars Source: TradingView
Both October and December 2020 did not experience negative pressures prior to these dates. Meanwhile, the positive results of 12% in the five days leading up to the deadline of April 30th raised a big question about how important the CME event was.
Given that there was no price drop in three of the last seven cases before the monthly futures and options expired, this evidence should put a nail into the coffin of an unfounded myth.
As mentioned earlier, attempts to develop theories about why salespeople behave more forcefully on certain dates are likely to fail.
As explained above, the price of Bitcoin has decreased during three of its last seven expiry periods. The 57% success rate should not set a trend in which positive results after a certain date are common during an uptrend.