Bitcoin Faces Pressure as Options Expiry Approaches

Bitcoin’s price is poised for significant volatility unless it recovers to above $60,000 before the options expiry on August 16.

Impending Options Expiry Creates Tension

The upcoming expiry of over $1.4 billion in Bitcoin (BTC) options could exert downward pressure, pushing prices below critical support levels. According to Deribit, the options will expire at 8:00 AM UTC on August 16, with a “max pain point” set at $60,000. This point indicates the price at which most options will become worthless.

As of 8:35 AM, Bitcoin has experienced a drop of over 3.6%, trading at $58,101.

This scenario suggests that the upcoming expiration may introduce heightened volatility unless Bitcoin can reclaim the $60,000 threshold. Historically, periods around options expiry often correlate with increased market fluctuations in cryptocurrency.

Impact of Bitcoin ETFs on Price Recovery

There has been a trend of inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) for two consecutive days, followed by negative net outflows surpassing $81 million on August 14, according to Farside Investors.

Nevertheless, analysts from Bitfinex believe that favorable Consumer Price Index (CPI) readings could drive renewed interest in Bitcoin ETFs. They noted:

“The favorable CPI data is expected to catalyze further inflows. Investors are likely positioning themselves to benefit from the expected rate cut and the potential for a broader market rally, possibly resulting in accelerated inflows into these ETFs, reflecting a shift in sentiment towards risk-on assets.”

The U.S. Bureau of Labor Statistics reported CPI data on August 14, indicating annualized price increases of 2.9%, the slowest rate since 2021.

ETF inflows can play a significant role in boosting cryptocurrency prices; in fact, ETFs represented approximately 75% of new investment in Bitcoin when it surpassed $50,000 in value earlier this year.

Is a Dip Below $56,000 Possible?

Bitcoin might dip below $56,000 before it can gain upward momentum again.

Market sentiment among large Bitcoin holders (whales) suggests a movement towards the $56,000 support level. According to a recent post by Trade Confident crypto research platform:

“Based on current market indicators, we are looking at $56k for $ BTC’s next move!”

The $56,000 price point is viewed as a critical demand zone for Bitcoin. As noted by pseudonymous trader Crypto Pump Analytics:

“Now the price of Bitcoin is expected to reach the next demand zone of $56k. When Bitcoin price comes near the $56k zone we will try to go long.”