Bitcoin options expiry approaches on Friday. BTC reclaimed the $63,000 mark on Thursday, but traders fear a correction ahead of the $1.4 billion expiry on Deribit.
The concerns stem from the US government bond yield climbing toward a level that many view as a warning sign. Specifically, the 10-year Treasury yield’s approach to 4.6% signals investor anxiety over the expansion of US government debt and prospects for further monetary policy expansion.
Why Bitcoin options expiry matters now
The 10-year Treasury yield’s rise signals investor anxiety over US government debt expansion and further monetary easing to avert recession. Consequently, Bitcoin has traded sideways while the Nasdaq-100 Index sits merely 4% below its all-time high.
The AI sector’s bullish momentum keeps pulling capital toward equities. For example, Asian chipmaker SK Hynix’s oversubscribed IPO in the US helped push the sector higher on Thursday. This was led by Arm Holdings’ 10% gains, Advanced Micro Devices’ 7% rally, and Micron’s 7% intraday gains.
Wednesday brought $85 million in net outflows from spot Bitcoin ETFs, ending a short three-day inflow run. Nevertheless, the figure does not confirm a reversal in institutional flows. More importantly, demand for Bitcoin options has stayed balanced between calls (buy) and puts (sell).
Call options volume has outpaced put instruments over the past four days, reflecting reduced demand for downside movements. However, the upcoming weekly options expiry features an interesting setup. Specifically, calls up to $62,500 total $137 million, while puts above $61,000 total $121 million.
Bitcoin bulls would gain significant ground with a move above $63,500 by the 8:00 AM UTC expiry on Friday. Consequently, this would boost their advantage to $190 million. Conversely, bears hold a smaller $100 million edge below $61,000, limiting their incentive without additional catalysts.
Oil price decline could strengthen demand for risk-on assets
A temporary truce in the Middle East could ease recession fears. Consequently, this could shift money from fixed income into risk markets, likely pushing Bitcoin price higher. In contrast, continued strength in the AI sector drains capital from other investments while traders fear large Treasury issuance to cover growing debt.
Traders should closely monitor whether Treasury yields will subside over the next week. Additionally, they should watch if an aggravated war in Iran pushes oil prices higher. Nevertheless, with Bitcoin put options buying remaining restrained in recent sessions, the market appears positioned to strengthen the $62,000 support level.
Bitcoin sits in a delicate spot. A successful expiry resolution above $63,500 could provide short-term relief. Nevertheless, sustained upward momentum would require a boost from the macro side. As long as these dynamics persist, the odds favor limited bullish momentum for Bitcoin in the near term.