Because of this, according to Bitfinex analysts, Bitcoin may pull back further

Bitcoin (BTC) briefly crossed the $70,000 mark on Monday morning before falling to $66,000, but analysts at crypto exchange Bitfinex say the leading digital asset may retreat further in the coming days.

According to the latest report from Bitfinex Alpha, the potential bearishness of bitcoin may be caused by significant downward pressure on implied volatility in the options market.

The State of the Bitcoin Options Market

After US President Joe Biden dropped out of the 2024 presidential race a week ago, volatility returned to the crypto market, with implied volatility in BTC options contracts rising to a four-month high of 68.6%

As the weekend approached and the market was buoyed by anticipation of speeches from former President Donald Trump and presidential candidate Robert F. Kennedy at the Bitcoin 2024 conference in Nashville, implied volatility fell . Bitfinex attributed this decline to traders reducing risk and closing their positions ahead of the event.

Although BTC briefly dipped below the $64,000 range, it continued its upward trajectory and maintained a bullish momentum for a few days. The asset has faced strong resistance in the $68,000-$69,000 region and endured a 7.24% intra-week drop.

BTC finally broke above $69,000 on July 29 to mark a new 7-week high, but pulled back sharply in the following hours. Bitfinex expects the $68,000-$69,000 level to continue to act as resistance and for BTC to hold below these lines.

BTC may stop or withdraw

During the Bitcoin conference call over the weekend, the market witnessed a brief spike in observed volatility; however, implied volatility continued to decline. Bitfinex said that such moves are usually seen before an option expires, especially if there are no imminent major events or catalysts.

Analysts found 61,000 BTC options expired on Friday, with a Put Call ratio of 0.62 and a notional value of $3.1 billion. This indicates significant activity in the options market driven by declining short-term call risk and puts the launch of the Ethereum exchange-traded fund and the approved Nashville conference as near-term price catalysts.

“Looking ahead, the market will continue to digest news from Nashville and adjust as monthly expiration occurs later in the week. We expect potential further downward pressure on implied volatility,” said analysts at Bitfinex.

With implied volatility still on the downside, BTC will likely stall or pull back further from the $68,000-$69,000 resistance zone.

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