Bitcoin’s price recovery has been gaining momentum ahead of the U.S. jobs report scheduled for Friday. The leading cryptocurrency, Bitcoin (BTC), surged to $113,000, reaching its highest level since August 28. This marked its first higher high since the mid-August peak of $124,000, indicating a potential bullish reversal in trend as the price exceeded its previous short-term peak.
Additionally, Bitcoin’s market dominance, representing its share of the total cryptocurrency market, rose to nearly 59%, a two-week high compared to a low of 57.5%. This increase suggests renewed capital inflows into Bitcoin, signaling a shift from recent market dynamics where whales were moving funds from Bitcoin to Ethereum.
The bounce in BTC’s price from its lows during the Asian trading session may have been influenced by the max pain theory. This theory suggests that as options near expiry, prices tend to gravitate towards the “max pain” level, where options buyers experience the greatest loss. In this case, Bitcoin options worth $3.28 billion expired on Deribit, with the max pain level set at $112,000.
According to the theory, as the expiry approaches, option sellers, typically institutions with significant capital, push the spot price towards the max pain point to maximize losses for option buyers. This manipulation is often achieved through trading the underlying asset in the spot or futures market.
Bitcoin’s price rose above $112,000 just before the expiry, aligning closely with the max pain theory for the first time. While this theory is widely accepted in traditional markets, its effectiveness in the cryptocurrency market remains a topic of debate among experts.
Traders are now eagerly awaiting the U.S. jobs report at 8:30 ET, as it could serve as the next catalyst for price movement in the Bitcoin market. The positive price action and increased market dominance indicate a potentially bullish outlook for Bitcoin in the near term.