As the monthly candle close of Bitcoin (BTC) comes nearer, indicators of heightened volatility are rising. With simply 4 days till the extremely anticipated CME futures contract and Deribit choices expiration, BTC’s near-term course stays unsure.
Three reasons to count on a spike in volatility over the subsequent week are BTC’s extended consolidation, key resistance degree overhead, and the sizable expirations of BTC futures and choices contracts.
Bitcoin consolidates for almost per week
On Aug. 17, the price of Bitcoin surged to as excessive as $12,486 on Coinbase, attaining a brand new yearly excessive. Since then, the price has consolidated inside a decent vary and been unable to interrupt above $12,00zero once more.
When Bitcoin consolidates for prolonged durations with out clear price motion to both course, it tends to see excessive volatility. Since Aug. 19, Bitcoin price has stayed inside a four.5% vary, which presents a decent vary for BTC.
BTC/USD nears a vital assist. Supply: TradingView.com, Mayne.
A pseudonymous dealer referred to as “Mayne” mentioned the $11,650 assist degree is important for BTC in the quick time period. Referring to the $11,650 to $11,730 assist vary, the dealer mentioned:
“If we are able to maintain the gray, wick into it could possibly be an extended entry. I believe we’ll push as much as $12.1k. Lose the gray, flip quick in the direction of $11.1k.”
Choices expiration approaching
Though the open curiosity in the Deribit Bitcoin choices market just isn’t as excessive as June, there may be $500 million price of choices open for the Aug 28 contract.
The simultaneous expiration of August choices and futures contracts might trigger giant Bitcoin price actions. One choices dealer mentioned:
“Not at June ranges, however nonetheless a bit over $zero.5 billion of BTC possibility OI presently sitting in 28AUG20 on Deribit.”
Josh Olszewicz, a well-liked cryptocurrency technical analyst, hinted that CME Bitcoin futures expirations might additionally result in intense price motion. He mentioned:
“CME BTC futs [futures] roll this week. Look ahead to elevated shenanigans.”
Bitcoin futures contracts on CME that face expiration. Supply: Josh Olszewicz.
Bitcoin wants to beat the $11.9K resistance degree
Since early August, the price of Bitcoin has rejected at the $11,900 degree twice, each seeing a comparatively giant sell-off shortly thereafter.
In the final 24 hours, Bitcoin rejected from the $11,800 to $11,900 resistance vary as soon as once more. If BTC continues to fall in the quick time period, it might print a decrease excessive formation on decrease timeframe charts.
Fundamentals drop off barely
Based on researchers at Glassnode, on-chain fundamentals barely dropped off in the previous week. They mentioned:
“Bitcoin on-chain fundamentals decreased barely throughout Week 34. GNI misplaced 6 factors, dropping from 71 to a present degree of 65 factors. This was due largely to a lower in the Sentiment subindex, whereas Community Well being and Liquidity additionally noticed small decreases.”
The confluence of a minor decline in fundamentals, extended consolidation, choices expiration, and a key near-term resistance raises the possibilities of a serious price response.