Bitcoin Faces Downside Risks Amid Upcoming Options Expiry
Bitcoin could experience significant downside volatility if it fails to climb back above $60,000 before the upcoming options expiration on August 16. The looming expiration of crypto options is putting substantial selling pressure on BTC, which could drive the price below another critical support level.
Over $1.4 billion in Bitcoin options are set to expire at 8:00 am UTC on August 16, according to data from Deribit. The “max pain point” for these options—where most contracts would expire worthless—is at $60,000.
However according to Cointelegraph, BTC has already dropped by more than 3.6% in the past 24 hours, trading at $58,101 as of 8:35 am. This decline indicates that if BTC doesn’t recover above the $60,000 threshold, the $1.4 billion options expiration could further exacerbate downside volatility. Typically, periods leading up to options expiration tend to bring increased price swings in the crypto market.
Could Bitcoin ETFs Fuel a Recovery?
There is speculation that BTC ETFs might help stabilize or even boost BTC prices. While inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) were positive for two consecutive days, they turned negative on August 14, with net outflows surpassing $81 million, as per Farside Investors.
Nonetheless, a favorable Consumer Price Index (CPI) reading could potentially trigger renewed inflows into Bitcoin ETFs. Bitfinex analysts expressed optimism to Cointelegraph, noting:
“The positive CPI data is likely to stimulate further inflows. Investors appear to be positioning themselves to capitalize on the anticipated rate cut and the possibility of a broader market rally. Consequently, we may see continued or even accelerated inflows into these ETFs, reflecting a shift in sentiment toward riskier assets.”
The U.S. Bureau of Labor Statistics (BLS) released July CPI data on August 14, revealing an annualized consumer price increase of 2.9%, marking the slowest rate of increase since 2021. ETF inflows have historically played a significant role in driving cryptocurrency prices higher. For instance, by February 15, ETFs accounted for roughly 75% of new investment in Bitcoin, helping it surpass the $50,000 milestone.
Could Bitcoin Fall Below $56,000?
There is a possibility that BTC could dip below $56,000 before regaining upward momentum. Market sentiment among Bitcoin whales—large holders—suggests that BTC may be headed toward the $56,000 support level. On August 14, Trade Confident, a crypto research platform, noted on X:
“Current market indicators suggest a $56k target for Bitcoin’s next move.”
The $56,000 level is viewed as a potential demand zone for Bitcoin. According to an August 15 post by pseudonymous trader Crypto Pump Analytics on X:
“BTC is now expected to reach the next demand zone at $56k. When the price approaches the $56k zone, we’ll be looking to go long.”
Leave a comment