Bitcoin Pulls Back 3-4% After Hawkish Fed Speech and Large Options Expiry
Bitcoin's price pulled back by around 3-4% over the last 16 hours, primarily driven by a hawkish speech from Federal Reserve Chair Kevin Warsh at the Jackson Hole conference.
The speech emphasized that inflation remains above the 2% target and that the Fed has 'work to do', which is a hawkish signal for risk assets like Bitcoin. The speech briefly knocked Bitcoin's price lower, with it dropping around $1,000 immediately after Warsh's remarks before stabilizing near $79,000.
A large options expiry on Deribit, worth approximately $6.36 billion notional, also played a role in the price action. The expiry encouraged hedging and choppy price action around key levels, with the 'max pain' zone near $69,000 according to CryptoPotato's analysis.
The pullback is also attributed to positioning after a short-squeeze-driven rally above $80,000, with high leverage and extreme 'greed' sentiment making a modest mean-reversion move very easy. The Fed speech, options expiry, and positioning data are clearly documented, but precise attribution of the 3-4% move involves some uncertainty.