Bitcoin Price Surges Above $65,000, Traders Eye Technical Breakout and Option Strategies

Bitcoin Price option
Bitcoin Price Surges Above $65,000, Traders Eye Technical Breakout and Option Strategies

NOIDA (— Bitcoin’s price surged past $65,000 following the release of the latest US Consumer Price Index (CPI) data, which indicated higher-than-expected inflation. However, analysts suggest Bitcoin price option traders remain cautious.

The price movement underscores the cryptocurrency market’s sensitivity to macroeconomic indicators and the Federal Reserve’s potential policy responses.

The US Bureau of Labor Statistics reported a rise in CPI driven primarily by shelter and gasoline costs. The inflation data exceeded expectations, raising concerns about further interest rate hikes by the Federal Reserve.

This initially triggered a sharp drop in Bitcoin’s price by approximately $4,300 as market participants reacted to the prospect of tighter monetary policy.

However, the market quickly rebounded. As traders and investors absorbed the data, Bitcoin’s price recovered, crossing the $65,000 mark. This recovery highlights the complex interplay between macroeconomic data and market sentiment in the cryptocurrency space.

Bitcoin Technicals Indicate No Immediate Bull Run

Meanwhile, Bitcoin price has formed a technical pattern called the ‘symmetrical triangle‘.

As the pattern develops over time, a series of lower highs and higher lows converge to a point, giving it its triangular appearance.

Bitcoin Price option
BTC price formed a symmetrical triangle pattern. Source:

Traders generally regard symmetrical triangles as neutral patterns that can break out in either direction. They often wait for a decisive breakout above or below the triangle’s boundaries with increased volume to confirm the pattern’s resolution.

The apex of the triangle is the point where the two trend lines converge, and breakouts tend to 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 typically expect a significant increase in volume to validate the breakout. May 15’s US CPI data release helped the BTC price break out of the pattern’s upper trendline, but the token still needs to confirm its bullish breakout.

According to technical analysis, the BTC price is primed for a nearly 32% rally to the pattern’s theoretical price target of nearly $85,500. However, if the bullish breakout fails, the bearish aspect of the pattern could take over, resulting in BTC price dropping to $44,500.

Deribit Suggests Short Strangle Strategy For Bitcoin Options

In a social media post, crypto exchange Deribit suggested traders employ a Short Strangle strategy, reflecting expectations of limited price volatility within a specific range. The Short Strangle involves selling both a call option and a put option that are out-of-the-money (OTM).

This strategy profits when the underlying asset, in this case, Bitcoin, remains within a defined price range until the options expire. The trader collects premiums from selling the options. If the price stays within the range, the options expire worthless, allowing the trader to keep the premium.

Bitcoin Price option
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 large upward or downward move could lead to substantial losses as traders would need to fulfill the obligations of the sold options.

For Bitcoin, Deribit suggested 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.

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