Bitcoin price breaks from range with drop below $28K, and options tilt toward BTC bears
On August 16, Bitcoin (BTC) closed below $29,000 for the first time in 56 days. Analysts quickly pointed to this week’s FOMC minutes, which expressed concerns about inflation and the need to increase interest rates, as the likely cause.
Despite the immediate reasons for the drop, the upcoming $580 million Bitcoin options expiry on Friday has favored the bears. They could potentially make a $140 million profit on August 18, adding to the downward pressure on Bitcoin and complicating BTC’s search for a bottom.
On Aug. 16, Federal Reserve Chair Jerome Powell emphasized the 2% inflation target. This pushed the U.S. 10-year Treasury yields to their highest level since October 2007, prompting investors to shift away from riskier assets like cryptocurrencies to favor cash positions and companies that are well prepared for such a scenario.
Notably, Bitcoin had already fallen to $29,000, its lowest point in 9 days, prior to the release of the Fed minutes. The impact of the minutes was limited, especially considering the 10-year yield had been rising, indicating skepticism about the Fed's ability to control inflation.
Additionally, on August 17, S&P 500 index futures only dropped by 0.6% compared to their pre-event level on August 16. During the same time, WTI crude oil gained 1.7%, while gold traded down 0.3%.
Concerns about China's economy might have also contributed to the decline. The country reported lower-than-expected retail sales growth and fixed asset investment, potentially affecting the demand for cryptocurrencies.
Although the exact causes of the price drop remain uncertain, there's a possibility that Bitcoin could reverse its trend after the weekly options expiry on August 18.
Between August 8 and August 9, the price of
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