Bitcoin Price Outlook: Market Volatility, Options Expiry, and Institutional Demand
Bitcoin Price Correction – Bitcoin (BTC) has seen a notable correction from its all-time high of over $99,000 on Friday, experiencing a drop of more than 3% in the past 24 hours. According to Geoff Kendrick, the Global Head of Digital Assets Research at Standard Chartered, the recent retracement is driven by a combination of factors, including shifts in the U.S. Treasury market and the upcoming monthly options expirations.
Market Shifts Impact Bitcoin’s Price
Kendrick explains that the turbulence in the market, including Bitcoin’s decline and the rally in long-term U.S. Treasury bonds, is a result of a reduction in the term premium for U.S. Treasurys. The term premium refers to the extra yield investors require for holding long-term bonds as opposed to rolling over short-term bonds. With improved confidence in U.S. Treasurys, Bitcoin’s appeal as a hedge against traditional financial market instability could diminish in the short term, which contributed to the recent drop in its price.
“This matters for Bitcoin because one of its core uses is to hedge against traditional finance issues, particularly those related to the banking sector or U.S. Treasurys,” Kendrick noted. “So lower term premium hurts Bitcoin, at least temporarily.”
Options Expiry Adds Short-Term Pressure
In addition to market shifts, Bitcoin is facing further short-term pressure due to its monthly options expiry, which is set for Friday. Data from Deribit reveals that there are 18,000 Bitcoin in open interest with strike prices between $85,000 and $100,000, which could restrict price movement leading up to the expiry. Kendrick mentions that such scenarios often lead to prices becoming stuck near the expiry levels.
Despite this short-term correction, Kendrick remains optimistic about Bitcoin’s long-term prospects, with a year-end target of $125,000 and further growth to $200,000 by the end of 2025.
Institutional Demand Supports Bitcoin’s Long-Term Growth
Kendrick also highlighted that despite the price dip, there is strong institutional demand for Bitcoin. Since the U.S. election earlier this month, spot Bitcoin exchange-traded funds (ETFs) have accumulated approximately 77,000 Bitcoin, and MicroStrategy has added another 134,000 Bitcoin to its holdings. With MicroStrategy’s buying showing no signs of slowing down, the average purchase price for ETFs and MicroStrategy since the election is around $88,700, which could provide a short-term floor for Bitcoin’s price, potentially consolidating in the $85,000 to $88,700 range before resuming its upward trajectory.
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