Bitcoin price drops sharply, facing important test

Bitcoin price falls to 6-week low

Last week, Bitcoin fell sharply by 9.7% to $112,100, its lowest level in six weeks, putting buyers at a disadvantage.

On August 29, a series of $13.8 billion worth of Bitcoin options contracts will expire, an event considered an important test for the current price trend.

Buyers run out of steam before the $114,000 threshold

Calls totaled $7.44 billion, 17% more than puts at $6.37 billion. However, most of the calls were placed at or above $125,000, which is almost meaningless at current prices.

Only 12% of calls are at or below $115,000, while 21% of puts are concentrated at $115,000 and especially concentrated at $112,000, an area that puts a lot of pressure on bulls.

Bitcoin price scenarios at expiry

According to data from Deribit, which accounts for 85% of the BTC options market share, five scenarios are likely to play out:

$105,000 - $110,000: Puts win with a net profit of $2.45 billion.

110,100 - 114,000 USD: Puts outnumber Calls by 1.5 billion USD.

$114,100 - $116,000: Puts dominate $360 million.

116,100 - 118,000 USD: Calls win 460 million USD.

118,100 - 120,000 USD: Calls outperform with 1.1 billion USD.

The $114,000 threshold is considered a “strategic point” that decides the balance between the two sides.

The Fed and tech stocks become the big unknowns

Bitcoin is not only dependent on the derivatives market, but also on macro factors. Investors are waiting for the speech of Fed Chairman Jerome Powell at the Jackson Hole conference. Any hint of a possible interest rate cut could help the asset price recover.

In addition, the US stock market also put pressure. A report from Morgan Stanley warned that soaring costs in the field of artificial intelligence could limit the ability of technology corporations to buy back shares, increasing cautious sentiment.