Bitcoin’s surprise weekend rally hit a wall Monday with a move that undid more than half of the weekend’s 5% rise, as Tuesday’s upcoming CPI print continues to influence sentiment.
Looking at perpetual and spot data shows the recent dip is being driven primarily by profit-taking, with a sharp drop in open interest and cumulative volumes delta.
A downtick in open interest signals traders are closing their positions. A drop in cumulative volume delta, meanwhile, indicates selling as traders take profit from long positions.
According to on-chain options platform Derive’s data, the $95,000 and $100,000 puts make up 10% of all Bitcoin options noted last week.
“Overall, puts on these strikes for this expiry make up almost 40% of all open interest for the end of August tenor,” Sean Dawson, the head of research at Derive, told Decrypt on Monday.
Eyes are now glued to the upcoming U.S. Consumer Price Index report for July at 8:30 AM ET.
A softer reading would support the case for the U.S. Federal Reserve to take a dovish stance on rate cuts, thereby easing the cost of borrowing for businesses to invest in the market.
A hotter CPI print, however, could “stall the rally,” according to Singapore trading firm QCP in an investor note on Monday.
“Right now, it’s less about the CPI figure itself and more about how it reshapes expectations for Fed policy, and by extension, liquidity conditions for crypto, Daniel Liu, CEO of Republic Technologies, told Decrypt.
Pressure from the Trump administration over Powell’s tenure remains a going concern for investors, but with a rate cut all but certain among bond traders, the outlook is tepid.
Still, experts who previously spoke to Decrypt believe that if the inflation rate sees a positive surprise by a significant margin, Powell could delay further cuts.
In that regard, QCP wrote Monday that traders are “hedging event risk” with put buying to protect their investments from a downward surprise in Bitcoin’s price.
“With prices at critical resistance, some profit-taking is probable ahead of CPI,” QCP wrote. “That said, the market’s ability to absorb recent ‘OG whale’ sell-offs without losing momentum reinforces our structurally bullish outlook.”
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