- Bitcoin rose as much as 2.4% to $85,594 before erasing the gains to trade little changed Wednesday, as slower-than-anticipated inflation data reinforced expectations that the Federal Reserve will not raise rates in October. It closes the quarter up 43%, its strongest since Trump was re-elected in late 2024.
- Leverage has been cleared out. Open interest has fallen to its lowest level since March, nearly 20% below August figures, even though bitcoin trades around 35% above its August low of $62,000, according to a Tagus Capital report. Much of the speculative positioning built during the run toward $87,000 has been flushed, resetting perpetual contracts to a neutral baseline.
- Options positioning is split across the curve. Calls expiring October 30 at $95,000 and $90,000 strikes have drawn by far the most open interest for that date, while puts at $75,000 and $60,000 are among the most bid contracts for late November and December respectively, according to Deribit data.
- Vetle Lunde, head of research at K33, described the derivatives market as having reset in a rare and orderly fashion, adding that past orderly unwinds offer few directional signals but have tended to precede low forward volatility as traders sit on the fence.
What Happened?
Recent large moves in bitcoin have been driven chiefly by rapid leverage wipeouts in the perpetual futures market, which accounts for the majority of crypto trading. A record wave of liquidations in bearish positions in late August produced a surprise rally as short sellers bought to cover. Lacie Zhang, research lead at Bitget Wallet, noted that October has a strong historical record for bitcoin but cautioned that seasonality alone is not an investment thesis.
Why It Matters?
The options structure is more informative than the price and it points in two directions at once. Heavy call buying for the October 30 expiry sits alongside the most bid puts of the whole curve at $75,000 and $60,000 for late November and December. That is a market positioned for a near-term advance while paying for downside protection into year-end, which is not a contradiction so much as a description of how little conviction exists beyond the seasonal trade. Anyone treating the October call interest as a bullish signal should note that the same participants are buying insurance for six weeks later. The open interest data is the genuinely constructive element and it qualifies earlier analysis, including my own reading of last week expiry. Open interest at a March low while price sits 35% above the August trough means this advance has been achieved with substantially less borrowed money than the moves that preceded it, and positions built on spot rather than leverage are more durable. The record of the past two months supports the caution: a record liquidation of bearish bets in late August produced a rally driven by forced covering rather than demand, and that is a different thing from accumulation. Lunde conclusion deserves weight precisely because it is unexciting. Orderly unwinds historically precede low forward volatility, which argues for a range rather than the breakout toward $100,000 that chart-based analysis has been pointing to. Two credible readings of the same market disagree, and the honest position is that the derivatives reset removes the mechanism behind recent sharp moves in both directions.
What Next?
The October 30 options expiry is the next scheduled event, and the concentration at $90,000 and $95,000 strikes means price behaviour approaching those levels will be shaped by dealer hedging rather than fundamentals. Watch whether open interest rebuilds from its March low, since a rapid increase would restore the leverage that produced this year violent swings. The Federal Reserve October meeting now carries lower expectations of a hike after the softer inflation print, which removes a headwind that has been weighing on risk assets all month. For anyone weighing the seasonal October case, Zhang framing is the right one to adopt. The puts stacked at $75,000 and $60,000 for November and December show where the market thinks the risk sits if the seasonal trade fails.
Affected Tickers and Coins: BTC, BLSH, COIN, MSTR
Source: Bloomberg
