Bitcoin reached close to $70,000 on Monday morning, but analysts at Bitfinex issued a warning about a potential short-term decline due to an upcoming significant options expiry. The analysts predict that the expiry of around $2.2 billion worth of options on August 2 could lead to downward pressure on the price of Bitcoin. They suggest that Bitcoin might stall or even pull back slightly from the $68,000-$69,000 resistance zone. Despite this risk, they note that leveraged long positions currently have more influence than spot market activities.
The analysts caution traders to be wary of directional trades, especially leveraged ones, as the market is likely to experience a short-term price decline or range. Despite briefly trading at $70,000, Bitcoin lost momentum and was trading below $67,000 by the afternoon session on Monday. The broader macroeconomic environment was described as “cautiously optimistic” by Bitfinex analysts, who highlighted that the housing market continues to be a drag on economic growth due to higher-than-expected median house prices impacting 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. 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. Despite these positive inflows, the analysts at Bitfinex remain cautious about the potential for a short-term price decline due to the options expiry.
It is important for traders to be aware of the potential risks associated with leveraged positions in the current market environment. While Bitcoin has seen significant gains in recent months, the upcoming options expiry could lead to increased volatility and a short-term price decline. Despite the cautionary note from Bitfinex analysts, Bitcoin remains in a firm higher timeframe uptrend, indicating potential for long-term growth. It is important for traders to exercise caution and carefully consider their trading strategies in light of the current market conditions.
