The simultaneous expiration of derivative contracts for stock options, index futures, and index futures options four times a year is known as “quadruple witching,” which has historically had effects on bitcoin’s price.
Single-stock futures, the fourth type of contract involved in quadruple witching, haven’t been traded in the United States since 2020 and have never made a significant contribution to the volume of equity trading, so they are not considered part of the event anymore.
The third Friday in March, June, September, and December is when what is now referred to as “triple witching” takes place. On these days, the volume of equity trading often increases, peaking in the final hour of trading as traders make changes to their portfolios.
Despite the intriguing name, what occurs during triple witching is neither a paranormal occurrence nor a mystery. Market makers close out the matched hedge positions after selling expiring stock and index options contracts, increasing trading volume. The rolling of contracts before expiration also boosts market activity in the options and futures sectors.
After the last quadruple witching on June 16, bitcoin had a significant increase, rising from about $25,600 to a new high of about $32,000 three weeks later. This was after the digital asset gained a 6.41% increase from $25,600 to $27,400 within 24 hours during the March 17, 2023, witching event.
The trend of bitcoin’s change is not always upward. The trend may begin moving up, down, or sideways and then shift in any direction. With one uptick at the end of August, the price of bitcoin has mostly been flat for the past three weeks.
The U.S. Dollar Index (DXY) is a crucial component for bitcoin. Since mid-July, when it moved from 99.5 to 105.06, where it is now, the DXY has been slowly rising. If the dollar rises to test the high last achieved at the end of September 2022 of 114.8, it is less likely to have a beneficial impact on bitcoin or the digital currency market.
Whatever the case, the upper weekly time frame bitcoin stochastic RSI has virtually reset, and a golden cross may occur in conjunction with the quadruple witching event.
Bitcoin investors are not strangers to bitcoin price swings, and historical data shows they continue to hold their bitcoin stack amid large price movements. The major driving factor behind this behavior seems to be investors recognition of bitcoin as a hard and scarce asset, that could retain its value in the long-term.