According to Bitfinex analysts, this is why Bitcoin is pulling back.

Bitcoin (BTC) briefly crossed the $70,000 mark on Monday morning before breaking back to $66,000, but analysts at crypto exchange Bitfinex say the major digital asset could pull back further in the coming days.

According to the latest Bitfinex Alpha report, Bitcoin's fall may be due to 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 has returned to the crypto market, with implied BTC options contracts hitting a four-month high of 68.6%.

As the weekend approached and the market buzzed with anticipation for speeches by former President Donald Trump and presidential candidate Robert F. Kennedy at the Bitcoin 2024 Nashville conference, implied volatility fell. Bitfinex attributed the decline to traders closing their positions ahead of the event.

Although BTC fell below $64,000, it continued its upward trend and maintained a bullish momentum for a few days. The asset faced strong resistance in the $68,000 to $69,000 range and endured a weekly decline of 7.24%.

BTC finally broke past $69,000 to mark a new 7-week high on July 29 but bounced back strongly in the following hours. The $68,000 to $69,000 level for Bitfinex remains as resistance and BTC may stay below these lines.

BTC may stop or recover.

During the Bitcoin conference on the weekend, the market witnessed a short spin in real dynamics; However, implied volatility continues to fall. Bitfinex says that such moves are usually seen before options expire, especially if there are no recent events or triggers.

Analysts confirmed that 61,000 BTC options expired on Friday, with a Put Call Ratio of 0.62 and a fair value of $3.1 billion. This shows high activity in the options market driven by de-risking short-term calls and puts past short-term price boosts such as Ethereum exchange-traded funds and the Nashville conference.

“Looking forward, the market will continue to see news coming out of Nashville, and will adjust as the monthly deadline unfolds over the weekend. We expect further downward pressure on implied volatility, Bitfinex analysts said.

While the implied volatility is still bearish, BTC will likely stop or pull back above the 68,000-$69,000 resistance zone.