Bitcoin Price Skyrockets Above $65,000, Traders Focused on Technical Breakout and Option Tactics
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NOIDA (CoinChapter.com)— Bitcoin’s value surged past the $65,000 threshold after the release of the most recent US Consumer Price Index (CPI) data, which indicated unexpectedly high inflation. However, analysts advise caution among Bitcoin price option traders.
The price movement underscores the cryptocurrency market’s sensitivity to macroeconomic indicators and the potential policy responses of the Federal Reserve.
The US Bureau of Labor Statistics reported a rise in CPI primarily due to increased costs of shelter and gasoline. The inflation data surpassed expectations, raising concerns about potential interest rate hikes by the Federal Reserve.
Initially, this triggered a sharp decline in Bitcoin’s price by approximately $4,300 as market participants responded to the possibility of tighter monetary policy.
However, the market quickly recovered. As traders and investors absorbed the data, Bitcoin’s price rebounded and surpassed the $65,000 mark. This recovery highlights the intricate interplay between macroeconomic data and market sentiment in the cryptocurrency space.
Bitcoin Technicals Show No Immediate Bullish Trend
Meanwhile, the price of Bitcoin has formed a technical pattern known as the ‘symmetrical triangle’.
As the pattern develops over time, a series of lower highs and higher lows converge at a point, giving it its triangular shape.
BTC price formed a symmetrical triangle pattern. Source:
Tradingview.com
Traders generally view symmetrical triangles as neutral patterns that can break out in either direction. They often wait for a clear breakout above or below the boundaries of the triangle, accompanied by increased trading volume, to confirm the pattern’s resolution.
The apex of the triangle is the point where the two trend lines intersect, and breakouts typically occur before the price action reaches this point. As the price action narrows, the volume trend should decrease, which often happens as the market consolidates within the pattern.
Traders usually expect a significant increase in volume to validate the breakout. The release of the US CPI data on May 15 helped the BTC price break out of the upper trendline of the pattern, but the cryptocurrency still needs to confirm its bullish breakout.
According to technical analysis, the BTC price is poised for a potential 32% rally towards the pattern’s theoretical price target of approximately $85,500. However, if the bullish breakout fails, the bearish aspect of the pattern could take over, causing the BTC price to drop to $44,500.
Deribit Recommends Short Strangle Strategy for Bitcoin Options
In a social media post, crypto exchange Deribit suggested that traders consider employing a Short Strangle strategy, reflecting expectations of limited price volatility within a specific range. The Short Strangle involves selling out-of-the-money (OTM) call and put options.
This strategy generates profits when the underlying asset, in this case, Bitcoin, remains within a defined price range until the options expire. Traders collect premiums from selling the options, and if the price stays within the range, the options expire worthless, allowing the trader to keep the premium.
Deribit suggested a short-strangle strategy for Bitcoin traders.
However, the strategy carries significant risk if Bitcoin’s price moves sharply outside the specified range. A substantial upward or downward movement could result in substantial losses as traders would need to fulfill the obligations of the sold options.
For Bitcoin, Deribit recommended a specific Short Strangle strategy involving selling a $65,000 call option and a $59,000 put option, both expiring on May 17, 2024. This strategy was based on the expectation that Bitcoin would trade sideways, staying between $59,000 and $65,000.
