Bitcoin Price Breaks $65,000, Traders Focus on Technical Breakouts and Options Strategies

Bitcoin prices have breached $65,000 following the release of the latest U.S. Consumer Price Index (CPI) data, which showed higher inflation than expected. However, analysts noted that Bitcoin price options traders remain cautious.

The price action highlights the sensitivity of the cryptocurrency market to macroeconomic indicators and the Federal Reserve’s potential policy response.

The Bureau of Labor Statistics reported that the CPI rose mainly due to rising housing and gasoline costs. The inflation data exceeded expectations and raised concerns about further interest rate hikes by the Federal Reserve.

This initially caused a sharp drop in the price of Bitcoin by around $4,300 as market participants reacted to the prospect of tighter monetary policy.

However, the market soon rebounded. As traders and investors digested the data, the price of Bitcoin recovered, breaking through $65,000. This recovery highlights the complex interplay of macroeconomic data and market sentiment in the cryptocurrency space.

Bitcoin technical indicators show no immediate bullish signs

Meanwhile, Bitcoin price has formed a technical pattern known as a “symmetrical triangle.”

As this pattern develops over time, a series of lower highs and higher lows converge to a point, creating the appearance of a triangle.

Traders often view symmetrical triangles as neutral patterns that can break out in either direction. They often wait for a decisive breakout of the triangle boundaries accompanied by increasing volume to confirm the resolution of the pattern.

The apex of the triangle is the point where the two trendlines converge, and breakout action often occurs before price action reaches this point. As price action narrows, volume trends should decrease, which usually happens when the market consolidates inside the pattern.

Traders typically expect a significant increase in volume to validate a breakout. The release of the U.S. CPI data on May 15 helped Bitcoin price break above the pattern’s ascending trendline, but the coin still needs to confirm its bull breakout.

According to technical analysis, Bitcoin price is poised for a gain of around 32%, close to the pattern’s theoretical price target of $85,500. However, if the bullish breakout fails, the bearish aspects of the pattern could take over, causing Bitcoin price to fall to $44,500.

Deribit recommends Bitcoin options traders use short butterfly strategy

On social media, cryptocurrency exchange Deribit recommended that traders adopt a short butterfly strategy, which involves selling out-of-the-money call options and out-of-the-money put options, reflecting expectations of limited price movements within a specific range.

This strategy profits when the price of the underlying asset, Bitcoin, remains within a certain price range before the option expires. Traders collect premiums by selling options. If the price remains within the range, the option becomes worthless and the trader gets to keep the premium.

However, this strategy presents significant risks if the price of Bitcoin moves drastically outside of the specified range. Large upward or downward price swings could cause traders to need to fulfill their obligations to sell options, resulting in large losses.

For Bitcoin, Deribit recommends a specific short butterfly strategy that involves selling a $65,000 call option and a $59,000 put option, both expiring on May 17, 2024. The strategy is based on the expectation that Bitcoin will trade between $59,000 and $65,000.