Bitcoin price today: Why did BTC USD reverse from $87,000 and drop to $84,000? Here's what crypto traders are watching now

In this news:

Key takeaways

Bitcoin fell below $84,000 after reaching over $87,000 earlier in the week.
A stronger US business activity report sent Treasury yields higher, pressuring non-yielding assets.
Traders are preparing for a massive $14 billion Bitcoin options expiry on Deribit.

Impact of US business activity on Bitcoin

Bitcoin’s rally took a sharp turn on Wednesday after a stronger-than-expected US business activity report sent Treasury yields higher as BTC USD price fell below $84,000 about an hour after the data was released, reversing a morning rally that had pushed the cryptocurrency above $87,000 on Binance. The cryptocurrency's decline came after Bitcoin had climbed roughly $10,000 in four days, moving from an area around $74,900 following the recent vote to a high of about $87,300 on Monday.

The move followed the release of the S&P Global flash Purchasing Managers’ Index (PMI), an early monthly survey of about 1,150 US companies, the September composite PMI rose to 58.4 from 56.0 in August, as per S&P Global. A reading above 50 indicates growing business activity. So the 58.4 reading marked the fastest growth since July 2021, while the manufacturing gauge rose to 57.0 from 53.9, which is its strongest reading since May 2022.

Rising costs and Treasury yields

The September survey also showed rising costs. As per S&P Global,input prices increased at their fastest pace since October 2022, while fuel and transport costs also rose as oil prices moved higher during the month.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said that “Firms' input costs have meanwhile jumped in September at the steepest rate for four years, with fuel and transport costs spiking higher thanks to the rise in oil prices seen during the month, which will add further to the upward pressure on selling prices and inflation in the coming months,” as quoted by BeInCrypto report.

Treasury yields moved higher after the business activity data was released. The 10-year US Treasury yield climbed to 5.058%, according to the TradingView data provided in the source material. It had closed at 4.96% on Tuesday, according to the US Treasury. Higher yields can make assets that do not pay interest, such as Bitcoin, less attractive.

Options market and upcoming expiry

Bitcoin’s recent price move has also stood out against activity in the options market as Bitcoin climbed roughly $10,000 in four days, which was about a 13% increase based on the figures provided. Despite that move, implied volatility remained around 35%, according to Greeks.live researcher Adam.

Attention is now turning to Friday’s Bitcoin options expiry on Deribit. Roughly $14 billion in BTC options are scheduled to expire, with call clusters around $85,000 and $100,000, according to the supplied analysis.

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