Bitcoin Price Could Crash To $58,000 as $2.35B Options Expire

Bitcoin price is treading a slippery slope after three days of consecutive declines. This followed a remarkable run to $70,000 after former US President Donald Trump hyped up the market with his explosive speech at the 2024 Bitcoin Conference on Saturday.

Bitcoin Price Shrugs Off The Fed’s Dovish Stance

On Wednesday, the Federal Reserve settled for a dovish stance, leaving interest rates between 5.25% and 5.5% despite inflation easing in the US for a few months.

Meanwhile, economists agree that the Fed will implement the first interest rate cut in September. As investor confidence improves, Bitcoin and other risk assets are anticipated to benefit from this decision.

BTC price hovered at $62,667, dropping almost 6% in the last 24 hours. A sweep through the liquidity-rich zone between $60,000 and $62,000 is expected, with the possibility of an extended correction toward $50,000.

How Can Traders Prepare for $2.93B Options Expiry?

The cryptocurrency market is delicately balancing ahead of Friday’s massive $2.93 billion options expiration. According to Deribit, a leading crypto options and futures trading exchange, BTC options have a face value of $2.35 billion.

Additional information revealed a put/call ratio of 0.58 and a max. pain point of $66,000. On the other hand, Ethereum stands out with $580 million options, a put/call ratio of 0.56, and a max. pain point of $3,300. The ETH price continued to struggle for support above $3,000 following the recent rejection at $3,500.

Tomorrow approximately $2.93 billion in crypto options are set to expire

BTC Options
Not. Value: $2.35 B
Put/Call Ratio: 0.58
Max Pain: $66,000

ETH Options
Not. Value: $0.58 B
Put/Call Ratio: 0.56
Max Pain: $3,300

Weekly Expiry: Friday, 8:00 AM UTC pic.twitter.com/QdrWCrXbnZ

— Deribit (@DeribitExchange) August 1, 2024

It is important to note that as options reach expiry, traders face the dilemma of whether to exercise the contracts or leave them to expire worthless. Intense volatility often erupts, leading to buying or selling pressure as determined by strike prices.

Bitcoin traded 10% below July’s peak of $70,000. It also holds below all three key Exponential Moving Averages (EMAs), including the 20-day, 50-day, and 200-day. This implies the trend is favouring the sellers, with BTC price prediction pointing to a potential slide below $60,000 support and then to $58,000.

The Relative Strength Index (RSI) at 27 is getting significantly oversold in the short term, further increasing the bearish grip. If the options expiry on Friday triggers more pressure on the sell-side, support at $60,000 could cave in, clearing the course for losses targeting $58,000.

Conversely, the near support at $62,000 may end the correction as Bitcoin ETFs net flows remain green despite the volatility experienced this week. According to SoSoValue data, BTC ETFs recorded roughly $299,000 in net inflow volume on Wednesday, bringing the total net inflow to $17.69 billion.

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