Bitcoin Derivatives Data Suggests Bears Will Put BTC Below $21,000, Leading to Friday's Options Expiry

Bitcoin's failure to break above $22,000 on July 8 saw the bears take a $100 million profit on July 8 this week's options expiry.

Market analysis

Most Bitcoin (BTC) traders would rather see a strong price correction and subsequent recovery than suffer for several months below $24,000. However, BTC has been doing the opposite since June 14 and its most recent struggle is the asset's inability to break above the $22,000 resistance. For this reason, most traders are holding back their bullish expectations until BTC posts a daily close above $24,000.

Events outside of the crypto market are the biggest factor impacting investors' outlook on digital assets and on July 14, US Treasury Secretary Janet Yellen warned that the inflation was "unacceptably high" and it bolstered support for the Federal Reserve's efforts. Asked about the impact of rising interest rates on the economy, Yellen acknowledged the risk of a recession.

On the same day, JPMorgan Chase announced a 28% drop in profits from a year earlier, despite flat revenue. The difference comes primarily from a $1.1 billion provision for credit losses due to a "slight deterioration" in its economic outlook.

Bitcoin's correlation to the S&P 500 remains incredibly high, and investors fear that a potential crisis in the global financial sector will inevitably lead to a retest of the June 18 low of $17,600.

S&P 500 and Bitcoin/USD 30 day correlation . Source: TradingView

The correlation measure ranges from a negative 1, which means some markets are moving in opposite directions, to a positive 1, which reflects...