Bitcoin Declines as Traders Caution of Market Volatility on Massive Expiries of Open Interest in Bitcoin and Ether Derivatives

Bitcoin fell on Monday evening as traders warned that markets could turn volatile in the coming day on massive expiries of open interest in bitcoin and ether derivatives.

The digital asset was down around 3 percent at US$95,420 (HK$744,246) as of 7.12am in New York on Monday.

But the token remained supported by news that cryptocurrency stockpiler MicroStrategy is planning to issue more shares, a move that would allow it to buy even more tokens.

MicroStrategy is seeking permission to increase the number of authorized shares of Class A common stock and preferred stock. Such a move would provide the company, which has transformed itself from a software maker into a bitcoin accumulator, more firepower.

MicroStrategy had already purchased an additional US$561 million of the digital token at an average price near last week's record high.

That marked the seventh week in a row of purchases. Bitcoin has risen 135 percent so far this year, easily outpacing returns from traditional investments such as global stocks and gold.

Some traders cautioned that markets could turn volatile in the coming day on massive expiries of open interest in bitcoin and ether derivatives.

Today, a record US$43 billion of open interest including US$13.95 billion in bitcoin options and US$3.77 billion in ether options will expire on derivatives exchange Deribit.

Earlier, analysts urged the US government to boost bitcoin reserves to offset its debt, after US billionaire Elon Musk again warned that the government could go bankrupt.

US debt surpassed US$36 trillion (HK$280.8 trillion) last month, and the current interest payments now account for about 23 percent of the government's total revenue. Musk said that this figure continues to rise, and if action is not taken soon, the increasing interest payments will consume the entire government budget.

Last week, the US Congress passed spending legislation in a down-to-the wire burst of activity that will avert a destabilizing government shutdown ahead of the busy holiday travel season.