QCP Capital, a trading firm based in Singapore, began its Monday report with a straightforward observation: “Implied volatility continues to decline, with Bitcoin remaining within a narrow trading range as summer approaches.” According to the firm, the market is entering the holiday season in the Northern Hemisphere similarly to last year, when one-month at-the-money (ATM) volatility plummeted from 80 volts in March to just under 40 volts by July, while Bitcoin repeatedly struggled to surpass the $70,000 mark. The notable change this year is the elevated trading range; Bitcoin has maintained a position between $100,000 and $110,000 for much of the past three weeks.
This period of stability is evident beyond Deribit's options platforms. Deribit's DVOL index, which measures 30-day implied volatility, is currently just above 40, marking one of its lowest levels in over two years. Realized volatility is even quieter, suggesting that even one-year lows on implied volatility still appear “optically rich,” according to QCP. This valuation discrepancy has prompted traders to sell gamma, leading to a decrease in perpetual open interest. Additionally, the popular hedge fund strategy of going long on spot through new ETFs while shorting futures has unwound, removing what QCP describes as “the natural bid for volatility” from the market.
Recent activity in the listed options market further reflects this stagnation. Dealers have reported rolling out July upside strikes around $130,000 and $140,000 to September in significant volumes, effectively extending bullish expectations further into the future. Meanwhile, Deribit’s put-skew has flattened as short-dated hedges expire worthless, a trend that often precedes a directional shift when macroeconomic catalysts emerge.
Key macroeconomic indicators that could influence Bitcoin's price are on the horizon. On Wednesday, the Bureau of Labor Statistics is set to release consumer price data for May. In April, the headline Consumer Price Index (CPI) rose modestly by 0.2% month-on-month and 2.3% year-on-year, while core prices increased by 0.2% and 2.8%, respectively. Economists anticipate a slight acceleration in the headline CPI to 0.3% month-on-month and 2.5% year-on-year, with core CPI expected to edge up to 0.3% and 2.9% respectively. Producer price data will follow on Thursday, with expectations for a rebound from April’s 0.5% month-on-month decline.
In addition to inflation data, other macro factors are at play. Last Friday’s U.S. non-farm payroll report exceeded expectations, with 139,000 jobs added compared to a consensus of 130,000, boosting the dollar and causing gold prices to drop over one percent. However, Bitcoin remained largely unaffected, as noted by QCP. This divergence continues, as U.S. equity futures are slightly down, gold is gaining on safe-haven demand, and Bitcoin is trading almost unchanged.
Geopolitical developments could provide the necessary spark that inflation data has yet to ignite. Senior officials from the U.S. and China are meeting in London today to negotiate a limited trade deal aimed at reducing export-control threats and various retaliatory tariffs. These discussions are significant for the cryptocurrency market, as tariffs directly influence the CPI and, through global risk sentiment, Bitcoin demand. QCP noted that a decisive move below $100,000 or above $110,000 could reignite broader market interest, though they currently see no immediate catalyst for such a shift.
Institutional positioning also suggests a sense of fatigue. Regulatory filings reveal that major hedge funds reduced their spot ETF holdings in the first quarter as the lucrative cash-and-carry spread narrowed. Net inflows into the 11 U.S. Bitcoin ETFs have slowed significantly since late May, maintaining cumulative additions at approximately $44 billion, unchanged for nearly two weeks, according to Farside data. Presently, the market is firmly situated within the $100,000 to $110,000 range, with volatility sellers continuing to collect premiums and the risk-reward ratio for momentum traders appearing unfavorable.
However, with CPI, PPI, and crucial trade negotiations all occurring within a 72-hour timeframe, the premiums collected by option writers may soon seem insufficient. Should inflation data exceed expectations, a reassessment of Federal Reserve rate cut predictions could transform last week’s equity rally into a risk-off sentiment, potentially pulling Bitcoin below the $100,000 level for the first time since April. Conversely, a benign inflation report combined with a symbolic easing of tariff tensions could shift the narrative towards a “soft landing” and structural demand via ETFs, reigniting bullish momentum as the June quarter-end approaches. In such a scenario, the rolled-out September $140,000 calls could become active much sooner than anticipated by their buyers.
Regardless of the outcome, time is of the essence
