Bitcoin (BTC) volatility could increase in the coming days, driven by speculation surrounding another Chinese fiscal stimulus announcement and the expiration of $1.1 billion worth of BTC options.
Will Chinese Stimulus Boost Bitcoin?
China's Finance Minister Lan Fuan is expected to detail upcoming fiscal stimulus measures at a press conference on Saturday, the State Council Information Office reported. The measures are intended to stimulate economic activity in the country.
On September 24, the People's Bank of China lowered the interest rate on existing mortgage loans by 0.5 percentage points and lowered the bank deposit reserve ratio to increase market liquidity.
The global cryptocurrency market is increasingly focused on China’s stimulus package as enhanced liquidity could have a positive impact on the prices of digital assets such as BTC.
While the announcement was expected, confirmation of a new round of fiscal measures, especially if they exceed market expectations, could provide a significant boost to risk assets like Bitcoin.
Additionally, if the Federal Reserve (Fed) decides to further cut benchmark interest rates, this could increase investor interest in riskier assets, including digital currencies, which are known for their volatility.
Currently, prediction markets expect rates to be cut by at least another 50 basis points (bps) by the end of the year. Such a move would increase global liquidity and help BTC avoid capitulation, which could otherwise see its price fall to as high as $40,000.
BTC options expiration could trigger price volatility
Another factor that could influence Bitcoin price volatility is the expiration of 18,000 BTC options worth $1.1 billion on October 11. At press time, the put/call ratio is 0.91, indicating a slight preference for put options.
With the Bitcoin price hovering around $60,000, the likelihood of reaching the “maximum pain” price of $62,000 is increasing. For those unfamiliar, “maximum pain” refers to the price level at which most options traders are likely to incur losses.
While Bitcoin has recently benefited from global interest rate cuts, geopolitical tensions in the Middle East and uncertainty surrounding the November U.S. presidential election make BTC’s future price action difficult to predict.
Despite the aforementioned challenges, some trading firms and cryptocurrency analysts are confident in the resilience of digital assets and the potential for a cryptocurrency rebound in the fourth quarter of 2024.
For example, cryptocurrency trading firm QCP Capital noted that Bitcoin’s rapid recovery after Iran’s offensive against Israel indicated strong investor demand for it.
Likewise, Bitwise CIO Matt Hougan outlined three major factors that could help BTC prices “move up” to a new all-time high (ATH) near $80,000 in the fourth quarter of 2024. At press time, BTC is trading at $62,086, up 2.7% over the past 24 hours.
