Bitcoin Briefly Dips Below $56,000 Before Marking a Slight Recovery Above $57,000

Bitcoin briefly fell below $56,000 on Aug. 15 before marking a slight recovery above $57,000 amid heavy volatility in anticipation of the expiry of a large volume of options contracts.

Bitcoin price briefly dipped below the $56,000 mark on Aug. 15 before recovering slightly above $57,000 amid high volatility ahead of the expiry of a large volume of options contracts.

The looming expiry could trigger significant price swings, with traders closely watching whether a crucial support level will hold. In the past 12 hours, Bitcoin has fluctuated around the $56,000 mark, a level that has been tested several times but has managed to hold so far.

This support has become a focal point for traders as more than $1.4 billion in Bitcoin options are set to expire at 08:00 A.M. UTC. The outcome of this expiry could set the stage for Bitcoin’s price direction in the coming days.

At press time, BTC was down 2.2% over the last 24 hours and trading at $57,620, based on CryptoSlate data.

Heightened volatility

Historically, options expiries have been associated with heightened volatility in the crypto market, and this event appears to be no different. The “max pain point” — the price at which most options contracts would expire worthless — is at $60,000.

With Bitcoin currently trading below this threshold, there is increased pressure on the market as bears and bulls battle for control.

Market sentiment has been mixed in the lead-up to this expiry. After briefly regaining momentum earlier in the week, Bitcoin’s price tumbled over 4.5% in the last 24 hours before the small recovery, suggesting that bearish forces are gaining the upper hand.

Some analysts caution that a break below $56,000 could lead to further declines, potentially dragging the flagship crypto into a deeper correction.

Institutional sentiment

However, not all indicators point to a bearish outcome. Institutional sentiment, while recently wavering, could swing back in Bitcoin’s favor. Farside Investors data showed a reversal in ETF inflows, with net outflows of over $81 million on Aug. 14.

The shift has raised concerns that institutional investors are hedging against potential downside risks. Yet, favorable macroeconomic conditions — particularly a lower-than-expected Consumer Price Index (CPI) reading — could reignite demand for Bitcoin as a hedge against inflation.

With the options expiry just hours away, the market remains on high alert. Traders and investors are bracing for potential turbulence, with many anticipating that the outcome of this expiry could influence Bitcoin’s trajectory for the rest of the month.

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