Bitcoin price may consolidate as $2.2b options expiry looms, analysts warn
As Bitcoin approached the $70,000 mark on Monday morning, analysts at Bitfinex issued a cautionary note, suggesting that the current rally might be short-lived due to an impending significant options expiry. Bitfinex analysts predicted in a note that they anticipate “potential further downward pressure” on the price of Bitcoin (BTC) as the monthly expiry of around $2.2 billion is set to occur on Aug. 2. They suggest that this event could cause Bitcoin to stall or even pull back slightly from the $68,000-$69,000 resistance zone.
Despite the risk of a pullback, the analysts highlight that leveraged long positions are currently more influential than spot market activities. They noted, “[…] thus while the market is in a firm higher timeframe uptrend, a short-term price decline or range is likely, and if the options market positioning is any indication, directional trades, especially leveraged should be avoided.”
On Monday morning, Bitcoin briefly traded at $70,000, a level not seen since June 7, before losing momentum and trading below $67,000 by the afternoon trading session. The broader macroeconomic environment was also discussed by Bitfinex analysts, who described the economic outlook as “cautiously optimistic.” They pointed out that the housing market remains a “drag on growth” due to higher-than-expected median house prices affecting existing home sales.
July has historically been a positive month for Bitcoin, with the cryptocurrency gaining over 15% in the last 30 days and recording more than $19 billion in year-to-date inflows, marking a new record. Data from CoinShares shows that Bitcoin products received nearly $520 million in capital between July 22 and July 26, pushing Bitcoin’s inflows past the $3.6 billion mark for the year.
In conclusion, while Bitcoin may face some consolidation and potential downward pressure in the short term due to the looming options expiry, the overall trend remains positive. Investors should be cautious and avoid leveraged trades, as the market dynamics could shift in the coming days leading up to the expiry date. Stay tuned for more updates on Bitcoin’s price movements and market trends.