Cryptocurrency Derivatives Series: Final Round of CME BTC Futures in 2019 – Prudent to Be Aware of Vols Amid Expiry Season of December Delivery

This Friday the latest round of CME 6 month Bitcoin futures contracts ends. The nature of futures contracts means they need to be settled on a set date, based on a contract.

At the beginning of the year, BTCUSD price surged from the lows of $3,122 to the recent highs of $13,880 levels (i.e. mammoth returns of 344 in percentage terms that too within a span of 6 months or so, refer 1stchart).

Although Year-2019 has been instrumental for bitcoin exchanges, crypto-traders and investors, it has been little turbulent. However, such robust uptrend has generated various price gaps in the CME Bitcoin futures contracts (refer 1st chart). Hammer pattern takes off rallies above 7 & 21-SMAs, the upswings form gap-up that reclaimed $7.5k.

Technically, Shooting star plummets prices below EMAs, both leading oscillators in tandem with price slumps in intermediate trend of BTCUSD, the underlying price has retraced 61.8% Fibonacci levels that has wiped off most of the gains in the year-2019. Whereas the slumps have halted at that juncture and showing some strong supports. As a result, hammer pattern occurred at $7,509 levels to counter (refer weekly chart).

Bulls, in the minor trend, counter with engulfing pattern at $7,285.53 level (refer 4H BTCUSD chart), Bears nudge prices towards 7&21-SMAs, both leading oscillators favour bulls & lagging indicators indecisive but bullish bias.

We could see the stiff resistance levels at $7,700 – 7,764 levels, if bulls manage to breakout these levels decisively, then we could foresee more upside traction easily upto $8.5k levels. 

CME BTC futures prices for December deliveries have halted their recent rallies and wedged between 7 & 21-EMAs. Bulls in minor trend attempts to bounce back upon hammer coupled with gap-up & doji patterns, bears nudge back below EMAs on overbought pressures (refer 3rd chart, 4H plotting for CME BTC).

All CME contracts will have to be traded, or settled, before this date. There is generally a fall in the trading volume of futures around settlement. This may coincide with a rise in volatility and the potential for short/long squeezing.

For the trading purpose, avoid contracts with lower volumes and lower open interest.

Please be noted that usually, the volume and open interests would be small at the early stages of futures contract life and expands as it reaches the maturity period and again drop during close to expiration stage.Thus, we add fresh longs at spot level for targets upto $8.5k levels with strict stop loss of $7,085 levels.