Bitcoin fell back below $78,000, erasing part of its gains from the start of the week. As US inflation numbers approach, options traders are also starting to reduce their exposure to the upside.
In brief
- Bitcoin is trading at $78,006 this September 10 at 11:39 a.m. UTC, according to CoinGecko, after exceeding $81,000 at the start of the week.
- Demand for call options has waned in recent days, a sign of increased caution among traders.
- The market expects producer price figures (PPI) on Thursday, then consumer price figures (CPI) on Friday.
Options Traders Become More Cautious
After the decline recorded last week, bitcoin managed to regain height before losing ground again. It is now trading around $78,000, about 4% below its recent high above $81,000.
Options markets are also showing some signs of caution. According to the OrderX trading terminal, the call skew continues to ease. Clearly, traders are less willing to pay a premium to bet on a further rise in bitcoin.
The move comes as several factors make it harder for risky assets to move forward. Oil remains high, US bond yields are under pressure and expectations around the Fed’s monetary policy are evolving rapidly.
The US central bank is due to make its rate decision on September 16, after its meeting on September 15 and 16. The inflation figures published between now and then could therefore play an important role in market expectations.
The PPI before the CPI
The first meeting will be given on Thursday with the publication of the producer price index (PPI) by the Bureau of Labor Statistics. The consensus cited by CoinDesk forecasts an increase of 0.4% over one month in August, after no change in July.
Over one year, the PPI could thus increase from 4.7% to 5.3%. The figure is particularly closely watched, because an acceleration in inflation could complicate the monetary easing scenario expected by part of the market.
The CPI, published on Friday, will be even more important. Lower-than-expected inflation could breathe new life into bitcoin and other risky assets. Conversely, an upside surprise could support the dollar and bond yields, both of which are generally unfavorable for bitcoin.
However, the expected progression of the PPI over one year must be put into perspective. Part of the increase comes from a base effect linked to last year’s figures. The 5.3% therefore does not necessarily reflect a new price surge of the same magnitude.
Bitcoin remains stuck between $76,000 and $82,000
In the short term, technical levels remain fairly clear. For the past week, bitcoin has been moving mainly between $76,000 and $82,000.
A sustainable move above $82,000 could revive the upward momentum observed in August. Conversely, a break of $76,000 would further weaken the short-term trend.
Everything will now depend on inflation figures. The market will mainly have to determine whether or not they reinforce expectations regarding the Fed’s next decision.
In this context, flows towards spot Bitcoin ETFs will also remain to be monitored. If they continue to absorb part of the available supply, they could limit the extent of a possible decline.
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