Navigating Bitcoin’s Volatile Rebound: Is This a Bear Trap or a Buying Opportunity?

Generated by AI AgentBlockByte
Friday, Aug 29, 2025 1:03 am ET2min read
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Aime RobotAime Summary

- Bitcoin rebounded to $113,600 in August 2025, sparking debate over sustainability amid conflicting technical signals and macroeconomic risks.

- Key levels like $117,570 and $116,000 (options expiry max pain) remain critical, with bearish momentum indicators clashing against bullish on-chain metrics.

- Altcoins like Solana and Cronos surged amid risk-on sentiment, but Bitcoin's failure to break above $115,000 risks triggering cascading altcoin sell-offs.

- Fed policy uncertainty and $13.8B options expiry create volatility risks, urging hedging strategies and macroeconomic alignment monitoring for investors.

Bitcoin’s recent rebound from $110,000 to $113,600 in late August 2025 has sparked debate: Is this a sustainable breakout or a bear trap? The answer hinges on aligning technical signals, macroeconomic dynamics, and risk management strategies. With the Federal Reserve’s policy trajectory and the looming $13.8 billion

Bitcoin
options expiry on August 29 as critical variables, investors must adopt a data-driven approach to navigate this volatile juncture.

Technical Divergence and Peter Brandt’s Warning

Bitcoin’s price action near $113,000 reflects conflicting signals. While the 20-day exponential moving average (EMA) and 200-day simple moving average (SMA) show bullish divergence—suggesting potential for a trend reversal—bearish momentum is evident in the MACD histogram and RSI readings, which indicate short-term exhaustion [3]. Peter Brandt, a prominent technical analyst, has emphasized the criticality of reclaiming the $117,570 level. Failure to do so could trigger a double-top formation, historically a precursor to bearish breakdowns [2]. This technical fragility underscores the need for caution, even as on-chain metrics like the MVRV Z-Score suggest undervaluation, a pattern that has historically preceded bullish cycles [3].

Altcoin Rotation and Risk-On Sentiment

While Bitcoin struggles to break above $115,000, altcoins like

Solana
(SOL) and Cronos (CRO) have surged, with CRO rising 58% in 24 hours amid a high-profile partnership with
Trump Media
Group [4]. This altcoin outperformance reflects a broader risk-on sentiment, driven by institutional adoption and macroeconomic optimism.
Ethereum
(ETH) and Solana, in particular, have benefited from validator queue adjustments and ecosystem upgrades, suggesting a potential shift in market leadership [4]. However, this rotation also amplifies liquidity risks: If Bitcoin fails to hold key levels, altcoins could face cascading sell-offs as capital retreats to safer assets.

Options Expiry and Derivatives Pressure

The August 29 options expiry looms as a pivotal event. Deribit’s "max pain" analysis points to $116,000 as the level where the most contracts expire worthless, creating a focal point for bearish positioning [5]. Open interest in Bitcoin futures has declined across major exchanges, signaling reduced conviction in the current rally [1]. With 21% of put contracts concentrated above $115,000, the market is primed for sharp volatility if Bitcoin fails to break above $114,000 or $116,000 [5]. Traders must hedge against this risk, particularly as leveraged positions could exacerbate price swings.

Fed Policy and Macro Alignment

The Federal Reserve’s dovish pivot remains a double-edged sword. Governor Michelle Bowman’s advocacy for three 2025 rate cuts has buoyed Bitcoin, aligning with historical trends where lower rates drive liquidity into risk assets [2]. However, mixed signals from the Jackson Hole symposium—where Jerome Powell hinted at potential cuts without clarity—triggered $941 million in crypto liquidations as Bitcoin fell below $110,000 [5]. The upcoming 10-year Treasury yield, currently at 3.8% (its lowest since 2021), and the U.S. Dollar Index will be critical indicators of macro alignment [6]. A dovish Fed could extend the bull run, but a hawkish pivot or delayed cuts could trigger a parabolic selloff.

Strategic Risk Management: A Data-Driven Approach

Given these dynamics, investors should adopt a measured strategy:
1. Position Sizing: Allocate 50–70% to Bitcoin and Ethereum, with smaller satellite positions in undervalued altcoins like

Chainlink
(LINK) or
Polkadot
(DOT) [2].
2. Hedging: Use Bitcoin put options to protect against expiry-driven volatility, particularly around the $116,000 max pain level [5].
3. Macro Monitoring: Track the 10-year Treasury yield and Fed speeches for liquidity signals, while avoiding overexposure to overvalued altcoins like
XRP
or
BNB
[6].

Conclusion

Bitcoin’s rebound is a high-stakes game of technical precision and macroeconomic alignment. While on-chain metrics and institutional adoption suggest resilience, the interplay of options expiry, Fed policy, and altcoin rotation demands disciplined risk management. Investors who balance core holdings with tactical hedging and macro awareness may find this volatile window a strategic entry point—or a cautionary trap.

Source:
[1] Crypto Markets Today: BTC's Gain Lack Derivative Traders' Support, YZY Leads to Losses [https://www.coindesk.com/markets/2025/08/28/crypto-markets-today-btc-s-gain-lacks-derivative-traders-support-yzy-leads-to-losses]
[2] Bitcoin Rises As Fed Governor Backs Three Rate Cuts In 2025 [https://finance.yahoo.com/news/bitcoin-rises-fed-governor-backs-180104340.html]
[3] Bitcoin Targets $118K as MVRV Signals Bullish Shift in ... [https://bravenewcoin.com/insights/bitcoin-btc-price-prediction-bitcoin-targets-118k-as-mvrv-signals-bullish-shift-in-market-cycle]
[4] Altseason 2025: Fed Policy Shifts and Altcoin Rotation Dynamics [https://www.ainvest.com/news/altseason-2025-finally-fed-policy-shifts-altcoin-rotation-dynamics-2508/]
[5] Bitcoin Bull Market Hinges On $13.8 Billion Options Expiry [https://cointelegraph.com/news/bitcoin-s-13-8b-options-puts-bulls-on-edge-ahead-of-key-test]
[6] Fed Policy Shifts and Crypto Market Volatility [https://www.ainvest.com/news/fed-policy-shifts-crypto-market-volatility-positioning-2025-rate-cut-driven-rally-2508/]