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As the $2 billion Bitcoin monthly options expiry on July 28 nears, market participants are considering whether it might establish $29,500 as a support level. While some argue that the recent interest rate hike by the United States Federal Reserve has adversely affected cryptocurrencies, Bitcoin proponents remain hopeful, claiming that the full effects of stricter economic policies require time to manifest in the markets. The impending expiry, combined with positive regulatory developments and robust corporate earnings, enhances the optimistic sentiment surrounding Bitcoin’s mid-to-long-term prospects.
Options Expiry Historical Impact and Bullish Momentum
Looking at previous expiries, the effect of options expiry on Bitcoin prices generally takes several days to stabilize, influencing trends accordingly. Market data shows that June’s expiry did not result in notable volatility, whereas May’s expiry led to a 9% increase, and April’s expiry caused a 7% decline. Nevertheless, with the current bullish momentum, including the rise in spot Bitcoin ETF applications and the passage of regulatory bills, the environment remains conducive to Bitcoin’s upward trajectory.
Bullish Factors Boosting Bitcoin
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The participation of significant fund managers such as BlackRock and Fidelity in spot Bitcoin ETF applications, along with regulatory advancements that clarify the differences between securities and digital commodities, enhances bullish momentum. Furthermore, encouraging corporate earnings reports, such as Meta Platforms’ $32 billion in second-quarter revenues, boost confidence in risk-oriented markets. With Consumer Confidence reaching a two-year peak, the likelihood of a recession seems to be lessening, reinforcing the case for ongoing economic growth.
Options Expiry Outlook and Potential Scenarios
The open interest for the upcoming July 28 options expiry is at $2 billion, with a 0.56 put-to-call ratio indicating a preference for buy options. If Bitcoin remains around $29,500 at the time of expiry, only $137 million worth of buy options will be relevant. Bears, looking to secure profits, may try to drive Bitcoin below the $29,000 mark, while bulls require a 5.5% price increase to realize gains.
Although bears may hold an advantage in the mid-to-long term due to the potential benefits of higher fixed-income returns stemming from lower inflation and rising interest rates, the prevailing bullish momentum in the economy supports the possibility of Bitcoin surpassing $31,000 in the upcoming weeks. As the options expiry approaches, investors are closely observing Bitcoin’s price movements, aiming to determine if $29,500 will act as a significant support level in the current market environment.
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