Bitcoin Bulls Target $25K as Miners Hold A New Record of 1.856M BTC

Since Bitcoin closed above the $20,000 mark at the end of July, many investors are questioning if the price can sustain its recovery. Despite the lackluster performance, bulls are still in the driver’s seat due to the upcoming options expiration.

Cryptocurrency and Inflation

Since the Federal Reserve raised interest rates and started to unwind its massive balance sheet, investors have reduced their risk exposure. The Bloomberg Commodity Index, which measures the price movements of various commodities, has lost 9%.

As the fight against inflation continues, investors still seek protection from the US dollar through cash and Treasury positions. On August 2, Mary Daly, the president of the San Francisco Fed, said that the fight against inflation is far from over. However, the impact of the tighter monetary policy on the global economy and employment levels is still not known.

Miners Now Hold a Record 1.856M BTC

According to data from CryptoQuant, the holdings of Bitcoin miners increased significantly in July. The volatility that affected the market in the past few months has subverted.

According to Jan Wuestenfeld, a contributor to CryptoQuant, the combined amount of Bitcoin in miners’ wallets has reached a new all-time high. As of July 29, the total amount of BTC in the miners’ hands was 1,865,272. In August, the total started to decline, with the balance at 1,864,842.

On July 6, the balance of miners’ wallets hit a local low, and on July 29, it hit a record high. According to Wuestenfeld, the Bitcoin mining community has fully recovered from the sell-off and outflows that occurred in June. As a result, the total amount of Bitcoin held in miners’ wallets reached a new high.

Wuestenfeld noted that the difficulties experienced by miners during the sell-off and outflows were largely responsible for the decline in the price of Bitcoin. During this period, the price of Bitcoin fell to its lowest level since late 2020.

The various problems that affected the network during the past few months were visible in the fundamentals of the Bitcoin network. According to him, the difficulty and hash rate has not yet recovered. On July 6, the difficulty increased for the first time in months.

Despite the positive effects of the market’s volatility, the number of miners remains in a downward trend. According to Wuestenfeld, some still struggle to maintain their equipment due to the price decline.

Bearish Bets are Mostly Below $22,000

The sudden recovery of Bitcoin from around $22,000 on July 27 surprised the market. Only 28% of the put options on August 5 were above this price level. In addition, 59% of the bets on the cryptocurrency were above $25,000. On the other hand, bulls may have been tricked by the $24,500 pump on July 30.

The 1.60 call-to-put ratio suggests more bullish bets on Bitcoin as the open interest in the contracts is around $315 million, while the put options are about $195 million. However, as the price of Bitcoin continues to rise, most of these positions will probably become worthless.

Price Suppression by Bears Requires Less Margin

On the other hand, bitcoin bulls need to see the price reach around $24,000 to secure a $90 million profit, while the bears need to see the price drop to $22,000 to set their gains. 

According to data from Coinglass, Bitcoin bears had liquidated their short positions worth around $140 million on July 26-27. It means that they have less leverage to push the price lower. A draw is the most likely scenario, as Bitcoin’s price could range between $22,000 and $24,000 before the August 5 options expire.