The price of Bitcoin is facing significant downside risk as over $1.4 billion worth of options contracts are set to expire on August 16, potentially pushing the cryptocurrency below a critical support level of $56,000. With Bitcoin currently trading around $58,101, down 3.6% in the past 24 hours, the market is bracing for heightened volatility as the options expiry looms.
According to data from Deribit, the “max pain point” for these options is set at $60,000, meaning that this is the price at which the majority of contracts would expire worthless. However, with Bitcoin trading below this level, there is a risk that the expiry could introduce further selling pressure, driving the price even lower.
Periods close to options expiry often see increased volatility, and this event is no exception. Analysts are closely watching whether Bitcoin can recover above the $60,000 mark before the expiry, which could help mitigate some of the downside risks.
There had been some optimism that inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) could help support the price. Inflows were positive for two consecutive days but turned negative again on August 14, with net outflows exceeding $81 million, according to data from Farside Investors.
However, the favorable Consumer Price Index (CPI) reading for July, showing an annualized price increase of 2.9%—the slowest rate increase since 2021—could catalyze more inflows into Bitcoin ETFs. Analysts from Bitfinex suggested that this could shift sentiment towards risk-on assets, potentially leading to increased inflows into Bitcoin ETFs, which could provide some support for the price.
Market sentiment, particularly among Bitcoin whales, suggests that a dip below $56,000 is possible before the cryptocurrency gathers more upside momentum. The $56,000 level is seen as a potential demand zone, with some traders positioning themselves for a long opportunity if Bitcoin reaches this level.
Trade Confident, a crypto research platform, indicated that current market indicators point towards $56,000 as the next move for Bitcoin. Meanwhile, pseudonymous trader Crypto Pump Analytics noted that the $56,000 zone could act as a crucial demand area, with traders likely looking to enter long positions if the price dips to this level.
As the options expiry approaches, the market remains on edge, with Bitcoin’s next move likely to set the tone for the coming weeks.