Bitcoin holds $56k support amid heightened volatility as options expiry looms

Bitcoin experienced a brief drop below $56,000 on August 15th, followed by a slight recovery above $57,000 amidst high volatility leading up to the expiry of a large volume of options contracts. The market was closely monitoring the crucial support level to see if it would hold as Bitcoin fluctuated around $56,000 in the past 12 hours, a level that has been tested multiple times but has remained resilient so far.

Traders were focused on the upcoming expiry of over $1.4 billion in Bitcoin options contracts at 8:00 AM UTC, as the outcome could significantly impact Bitcoin’s price movement in the days ahead. As of the latest data from CryptoSlate, BTC was down 2.2% over the last 24 hours, trading at $57,620.

Increased Volatility

Options expiries historically lead to heightened volatility in the crypto market, and this event was no exception. The “max pain point” at $60,000, where most options contracts would expire worthless, added pressure to the market as bears and bulls fought for control.

While market sentiment was mixed leading up to the expiry, with a 4.5% drop in Bitcoin’s price before a minor recovery, some analysts warned that a break below $56,000 could trigger further declines and a deeper correction.

Institutional Outlook

Despite concerns of a bearish outcome, institutional sentiment could shift back in favor of Bitcoin. Although there were net outflows in ETF investments, favorable macroeconomic conditions, such as a lower-than-expected Consumer Price Index reading, could reignite demand for Bitcoin as an inflation hedge.

With the options expiry imminent, traders and investors were on high alert for potential turbulence, with many expecting the outcome to influence Bitcoin’s trajectory in the upcoming month.