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Bitcoin (BTC) may experience increased volatility in the coming days, driven by speculation surrounding another Chinese monetary stimulus announcement and the expiration of $1.1 billion worth of BTC options.
China’s Stimulus Measures to Help Bitcoin?
According to the State Council Information Office, China’s Minister of Finance, Lan Fo’an, is expected to provide details on upcoming economic stimulus measures during a press conference on Saturday. These measures aim to promote economic activity in the country.
On September 24, the People’s Bank of China (PBoC) lowered the interest rate on existing loans by 0.5% and lowered the required reserve ratios for banks to raise capital in the market.
The global crypto market is increasingly paying attention to China’s recovery plans, as the improved currency can have a positive impact on the prices of digital assets such as BTC.
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Although the announcement is expected, the confirmation of another round of monetary measures, especially if they exceed market expectations, can significantly increase the risk of assets such as Bitcoin.
In addition, if the US Federal Reserve (Fed) decides to reduce key interest rates, may increase investor appetite for risky assets, including digital currencies known for their volatility.
Currently, forecast markets are predicting at least another 50 basis points (bps) cut in interest rates by the end of the year. Such a move would increase global liquidity and help BTC avoid a capitulation that could cause its price to hit the high $40k range.
Expiration of BTC Options Can Cause Price Volatility
Another factor that can influence Bitcoin price volatility is the $1.1 billion worth of 18,000 BTC options. set up it will expire on October 11. At press time, the put-call ratio is 0.91, indicating a slight bias in put options.
As Bitcoin moves around $60,000, the chances of reaching the “big pain” price of $62,000 are increasing. For those unfamiliar, “pain” refers to the price level at which many options traders may experience losses.
Although Bitcoin has recently benefited from the reduction in global interest rates, political tensions in the Middle East and uncertainty surrounding the US presidential election in November have made it difficult to predict BTC’s future price movements.
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Despite the above challenges, some trading firms and crypto analysts are confident about the stability of digital assets and the possibility of a crypto rally for Q4 2024.
For example, the crypto trading company QCP Capital noted that the rapid recovery of Bitcoin following the Iranian attack against Israel showed its strong demand among investors.
Likewise, Bitwise CIO Matt Hougan explained three major factors that could help the price of BTC “melt” to an all-time-high (ATH) close to $80,000 in Q4 2024. BTC is trading at $62,086 at press time, up 2.7% in hours 24 ago.
Featured image from Unsplash, chart from Tradingview.com
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