As we approach the close of the Bitcoin monthly candle (BTC), signs of increasing volatility are emerging. With only four days remaining until the long-awaited expiration of the WEC futures contracts and Deribit options, the direction of the BTC price in the short term remains somewhat uncertain.
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Three reasons to expect increased volatility over the next week are the prolonged consolidation of BTC, a key upper resistance level, and the considerable maturities of BTC futures and options contracts.
Bitcoin has been consolidating for almost a week
On August 17, the price of Bitcoin rose to $12,486 in Coinbase, reaching a new annual high. Since then, the price has been consolidated within a narrow range and has not been able to exceed USD 12,000 again.
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When Bitcoin consolidates for long periods without clear movement in any direction, it tends to see high volatility. Since August 19th, the Bitcoin price has been within a range of 4.5%, which presents a narrow range for BTC.
A pseudonymous trader known as „Mayne“ said that the USD 11,650 support level is critical for BTC in the short term. Referring to the support range of USD 11,650 to USD 11,730, the trader said:
„If we can hold the gray, the fuse in it could be a long breakout. I think we would push up to USD 12.1k. Lose the gray, a short turn towards the USD 11.1k“.
Expiration of the options is approaching
Although the open interest in the Bitcoin options market at Deribit is not as high as seen in June, there are options open valued at USD 500 million for the August 28 contract.
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The simultaneous expiration of August futures and options contracts could cause large movements in the Bitcoin price. One option trader said:
„Not at June levels, but still a little over USD 0.5 billion of open interest in BTC options is currently at August 28th 20 at Deribit.
Josh Olszewicz, a well-known technical analyst of crypto-currencies, hinted that WEC’s Bitcoin futures maturities could also lead to intense price action, he said:
„WEC BTC futs (futures) are this week. Expect to see a lot of mischief“.
Bitcoin needs to break through the $11,900 resistance level
Since the beginning of August, Bitcoin’s price has rejected the $11,900 level twice, and in both cases we saw a relatively large mass sale soon after.
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During the last 24 hours, Bitcoin once again rejected the resistance range between USD 11,800 and USD 11,900. If BTC continues to fall in the short term, it could print a lower high formation on the shorter time frame charts.