As the $2 billion Bitcoin monthly options expiry on July 28 approaches, market participants speculate on whether it could establish $29,500 as a support level. While some believe the recent United States Federal Reserve interest rate increase negatively impacted cryptocurrencies, Bitcoin bulls remain optimistic, asserting that the full impact of tighter economic policies takes time to influence the markets. The upcoming expiry, in collaboration with bullish regulatory developments and strong corporate earnings, fuels positive sentiment for Bitcoin’s mid-to-long-term outlook.
Options Expiry Historical Impact and Bullish Momentum
Examining past expiries, the influence of options expiry on Bitcoin prices typically takes a few days to consolidate, shaping trends accordingly. Market data indicates that June’s expiry did not lead to significant volatility, but May’s expiry resulted in a 9% rally, while April’s expiry triggered a 7% correction. However, with the ongoing bullish momentum, including the rise of spot Bitcoin ETF requests and the approval of regulatory bills, the atmosphere remains favorable for Bitcoin’s upward potential.
Bullish Factors Boosting Bitcoin
The involvement of major fund managers like BlackRock and Fidelity in spotting Bitcoin ETF requests, alongside regulatory developments clarifying distinctions between securities and digital commodities, bolsters bullish momentum. Additionally, positive corporate earnings reports, including Meta Platforms’ $32 billion in 2Q revenues, instill confidence in risk-on markets. With Consumer Confidence reaching a two-year high, the risk of a recession appears to be diminishing, supporting the argument for continued economic growth.
Options Expiry Outlook and Potential Scenarios
The open interest for the upcoming July 28 options expiry stands at $2 billion, with a 0.56 put-to-call ratio reflecting an imbalance favoring the buy options. If Bitcoin hovers near $29,500 at the expiry time, only $137 million worth of buy options will remain relevant. Bears, aiming to secure profits, may attempt to push Bitcoin below the $29,000 level, while bulls need a 5.5% price increase to secure gains.
While the bears may have an advantage in the mid-to-long term due to the potential benefits of higher fixed-income returns resulting from reduced inflation and increased interest rates, the overall bullish momentum in the economy supports the possibility of Bitcoin breaking above $31,000 in the coming weeks. As the options expiry approaches, investors closely monitor Bitcoin’s price action, seeking to identify whether $29,500 will serve as a critical support level in the current market climate.
