Bitcoin (BTC) saw a brief surge past the $70,000 mark before retracing back to $66,000 on Monday morning, leaving analysts at Bitfinex predicting a potential further decline in the coming days. The latest Bitfinex Alpha report points to significant downward pressure on implied volatility in the options market as a key factor in this potential decline. Following President Joe Biden’s withdrawal from the 2024 presidential race, volatility returned to the crypto market, reaching a four-month high of 68.6% in BTC options contracts. However, as anticipation built around speeches from former President Donald Trump and presidential candidate Robert F. Kennedy at the Bitcoin 2024 Nashville conference, implied volatility dropped as traders de-risked and closed their positions.
Despite briefly dipping below the $64,000 range, BTC maintained its upward momentum, facing resistance at the $68,000 to $69,000 region. The asset experienced a 7.24% decline during the week but managed to push past $69,000 on July 29 to hit a new 7-week peak before retracting. Bitfinex anticipates the $68,000 to $69,000 level to continue acting as resistance, potentially keeping BTC below those lines for the time being. The recent Bitcoin conference triggered a short spike in realized volatility, while implied volatility continued to decrease. This pattern is typical before options expiry, especially in the absence of significant upcoming events or catalysts.
Bitfinex analysts observed that 61,000 BTC options expired on Friday with a Put Call Ratio of 0.62 and a notional value of $3.1 billion, indicating significant activity in the options market fueled by the de-risking of short-dated calls and puts. With short-term price catalysts like the Ethereum exchange-traded fund launch and the Nashville conference passing, the market is likely to react to ongoing news and adjust as the monthly expiry approaches at the end of the week. Implied volatility is expected to continue declining, potentially leading to further pressure on BTC and causing it to stall or pull back from the resistance zone of $68,000 to $69,000 in the near future.
In summary, Bitcoin’s recent price movements and the state of its options market suggest a potential pullback or stall in its upward trajectory. With implied volatility decreasing and traders adjusting their positions ahead of key events, such as the Bitcoin conference and options expiry, BTC may face continued resistance in the $68,000 to $69,000 range. As the market reacts to ongoing developments, including news from the Nashville conference and the monthly expiry, analysts anticipate further downward pressure on implied volatility, potentially impacting Bitcoin’s price action in the days ahead. Investors and traders will need to closely monitor these factors to make informed decisions regarding their Bitcoin positions in the current market environment.
