Bitcoin (BTC) might encounter increased volatility in the upcoming days, spurred by speculation surrounding a potential Chinese fiscal stimulus announcement and the impending expiration of BTC options totaling $1.1 billion.
According to the State Council Information Office, China’s Finance Minister, Lan Fo’an, is slated to provide specifics on new fiscal stimulus measures during a press conference on Saturday. These initiatives are intended to stimulate economic activity within the country. Recently, on September 24, the People’s Bank of China (PBoC) lowered interest rates on existing mortgages by 0.5% and reduced reserve requirement ratios for banks to enhance market liquidity.
The global cryptocurrency market is closely observing China’s stimulus strategies, as increased liquidity could favorably affect the prices of digital assets like BTC. If the announcement confirms another wave of fiscal measures, especially if they surpass market expectations, it could substantially boost risk-on assets such as Bitcoin.
Moreover, if the US Federal Reserve (Fed) opts to further decrease key interest rates, it could amplify investor interest in riskier assets, including digital currencies noted for their volatility. Current prediction markets are anticipating at least another 50 basis points (bps) cut in interest rates by the year’s end. Such an action would elevate global liquidity and help BTC avoid a significant drop that might push its price down to the high $40,000 range.
Another element influencing Bitcoin’s potential price volatility is the impending expiration of $1.1 billion worth of 18,000 BTC options on October 11. Presently, the put-call ratio stands at 0.91, showing a slight preference for put options. With Bitcoin trading around $60,000, the likelihood of reaching the “max pain” price of $62,000 is increasing. “Max pain” refers to the price level where the most options traders are projected to incur losses.
Despite recent global interest rate cuts benefiting Bitcoin, geopolitical tensions in the Middle East and the uncertainty surrounding the upcoming U.S. presidential election in November complicate predictions for BTC’s future price movements. Nonetheless, some trading firms and cryptocurrency analysts remain optimistic about the resiliency of digital assets and foresee a potential Q4 2024 crypto rally.
For example, crypto trading firm QCP Capital pointed out that Bitcoin’s rapid recovery following the Iranian offensive against Israel highlighted its strong demand among investors. Additionally, Bitwise CIO Matt Hougan identified three key factors that could propel BTC to a new all-time high (ATH) of nearly $80,000 in Q4 2024. Bitcoin is currently trading at $62,086, reflecting a 2.7% increase over the last 24 hours.
Bitcoin has managed to recover losses incurred over the past two days, as evidenced by the daily chart.