On Aug. 16, Bitcoin closed below $29,000 for the first time in 56 days. Analysts quickly pointed to this week’s Federal Open Market Committee minutes, which expressed concerns about inflation and the need to increase interest rates, as the likely cause.
Despite the immediate reasons for the drop, the upcoming $580 million Bitcoin (BTC) options expiry on Friday favors the bears. They could potentially make a $140 million profit on Aug. 18, adding to the downward pressure on Bitcoin and complicating BTC’s search for a bottom.
Federal Reserve minutes did not impact traditional markets
On Aug. 16, Federal Reserve Chair Jerome Powell emphasized the 2% inflation target. This pushed the U.S. 10-year Treasury yield to its highest level since October 2007, prompting investors to shift away from riskier assets like cryptocurrencies in favor of cash positions and companies that are well prepared for such a scenario.
Notably, Bitcoin had already fallen to $29,000, its lowest point in nine days, prior to the release of the Fed minutes. The impact of the minutes was limited, especially considering the 10-year yield had been rising, indicating skepticism about the Fed’s ability to control inflation.
Additionally, on Aug. 17, S&P 500 index futures only dropped by 0.6% compared to their pre-event level on Aug. 16. During the same time, WTI crude oil gained…
