(Bloomberg) -- Bitcoin is closing out one of its biggest September rallies on a down note, dropping back below $65,000 and undercutting optimism going into what has historically been the cryptocurrency’s best month for returns.
“After a strong run-up since early September, technical indicators are now signaling headwinds for Bitcoin,” said Brian Strugats, head of spot trading at the crypto prime broker FalconX. “The stochastic RSI is in overbought territory, and large sell walls, particularly at the $66,150 level, are emerging from significant BTC holders on exchanges.”
The original digital asset fell about 3.7% to $63,370 as of 3:05 p.m. in New York on Monday, cutting its return for the month to around 7.6%. That’s still the biggest September increase in a dozen years. Traders sometimes refer to October as “Uptober” since Bitcoin has only closed lower for the month twice since 2013.
“After a consistent three-week rally toward the $65,000 resistance level, I’ve observed weakening organic demand for spot as momentum-driven traders started to take profit and add supply to the market,” said Chris Newhouse, director of research at Cumberland Labs.
Bitcoin’s price was whipsawed by the expiration of $5.8 billion worth of crypto options on Friday. The expiry was one of the largest this year, according to data compiled by crypto derivatives exchange Deribit.
The $65,000 price level was key for many traders as the expiry triggered an uptick in volatility as gamma hedging took control. The dynamic occurs around big expiries when dealers providing options contracts either buy or sell en masse in an effort to neutralize their fast-moving exposures.
“Selling flow was driven mainly by profit taking via active spot selling on exchanges as well as new shorts entering the market with open interest in BTC increasing in the perpetual futures market,” said Bohan Jiang, head of OTC options trading at Abra.
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