Bitcoin is entering one of its most influential trading weeks since the February correction, with options traders positioning for a possible break above $85,000 as Middle East tensions push up oil prices and fuel inflation expectations.
According to crypto slate The largest digital asset briefly fell on Sunday following President Donald Trump’s rejection of Iran’s latest response to a U.S. peace proposal, but has since rebounded above $82,000 and fallen to nearly $81,034 at press time, according to the data.
The move kept Bitcoin within the narrow range that has defined trading in recent weeks, even as geopolitical risks continue to impact energy markets and interest rate expectations.
Notably, President Trump called Iran’s counter-offer “totally unacceptable” after Iran sought war reparations, the unfreezing of blocked financial assets, and recognition of sovereignty in the Strait of Hormuz.
Given its role in moving oil and liquefied natural gas, the waterway has become a major conduit for the U.S.-Iranian conflict to spill over into global markets.
Market tensions continue as a prolonged oil shock could stagnate inflation, delay Federal Reserve interest rate cuts and weigh on speculative assets, creating a difficult situation for Bitcoin.
Still, while Bitcoin continues to hover near $80,000, options data, capital flows, and the Washington crypto calendar suggest traders may be underestimating the risk of upside compression.
Oil shock brings inflation back to center stage
The immediate test comes on Tuesday, when the Bureau of Labor Statistics releases consumer price index data for April.
Economists expect the CPI to rise 0.6% from March and 3.7% from a year ago, up from 3.3% in March, as markets brace for a reacceleration in headline inflation due to soaring global oil prices. Core CPI, which excludes food and energy, is expected to remain close to 2.7% year-on-year.
The burden of soaring energy prices was already evident in March. The CPI rose at its highest annual pace this year as the energy component soared as gasoline prices rose.
The April report therefore provided a direct test of whether the oil crisis is limiting headline inflation or whether it is starting to affect the prices of a broader range of goods and services.
David Auerbach, chief investment officer at Hoya Capital, said upcoming data could shape expectations about the Fed’s policy direction, following Tuesday’s CPI, Wednesday’s producer prices, Thursday’s retail sales and late-week unemployment claims.
He said the headline CPI is expected to show a notable re-acceleration in oil-related matters, while the core CPI will be watched for signs of energy costs shifting into broader categories.
Prediction markets similarly lean toward the view that inflation will continue. Polymarket traders say there is a 100% chance that inflation will exceed 3% in 2026 and a 94% chance that it will exceed 3.5%, but Kalsi pricing showed April’s CPI was above 3.2% year-on-year.
Polymarket traders also said there is a 55.6% chance that the Fed will not cut rates in 2026, and traders put a 95.5% chance that June’s Federal Open Market Committee meeting will end with interest rates unchanged.
However, a real-time inflation gauge counters this. Truflation’s U.S. Inflation Index remains close to 2% year over year due to a methodology designed to track daily price changes, rather than the staggered monthly process used in official CPI data.
This benign view gives crypto bulls the argument that commodity, food and gasoline pressures may already be cooling below the surface, even as official inflation forecasts rise due to the oil crisis.
For Bitcoin, this distinction is important. The strong performance in the CPI strengthens expectations that the Fed will keep policy on hold, potentially pulling Bitcoin back toward the $80,000 and then $78,000 support zones.
However, as printing cools, the persistent inflation trade will subside, risk appetite will improve, and the path to the $85,000 zone that traders will be eyeing will once again open.
Washington gives catalyst to Bitcoin bulls
This week’s political calendar adds yet another source of potential volatility for BTC.
The Senate Banking Committee is scheduled to consider the CLARITY Act on May 14, advancing the long-awaited virtual currency market structure bill that defines when digital tokens fall under securities and commodity rules.
The bill has become a focal point for crypto companies, banks, and investors seeking a clearer U.S. regulatory framework.
The compromise negotiated by Sens. Thom Tillis and Angela Alsobrooks would prohibit customer rewards for holding idle stablecoins, which banks say are similar to interest on deposits, but would allow rewards associated with active stablecoin usage, such as payments.
This language keeps banking groups and crypto advocates locked in a late-stage pre-markup dispute.
For Bitcoin traders, the May 14th vote is less about a single stablecoin provision and more about whether Congress can pass crypto legislation in the divided Senate.
A smooth markup would strengthen the argument that U.S. digital asset rules are on track to become law after years of implementation uncertainty. But a late or split vote would eliminate one of this week’s potential upsides.
The Federal Reserve’s calendar is also attracting attention. Senate Republicans have made Kevin Warsh’s confirmation a top priority, according to Roll Call, as the process unfolds as Jerome Powell’s term nears its end.
The leadership change coincides with the Consumer Price Index (CPI) report, leaving little room for markets to distinguish between inflation statistics and expectations for the central bank’s next steps.
There is room for upside in the options book.
Macro risks are colliding with a market structure that has begun to tilt away from the heavily defensive posture seen earlier this year.
In a note shared with crypto slatecryptocurrency research firm 10x Research says:
“Kevin Warsh’s Senate confirmation vote on Monday, May 11th, and the anticipated advancement of the CLARITY Act on Thursday, May 14th, are exactly the kind of macro and regulatory catalysts that will force an unwinding of defensive positioning.Financial institutions that placed put hedges during the January-April drawdown have no reason to maintain their hedges until the Fed leadership transition is confirmed and legislative crypto transparency is ensured.”
According to the company, Bitcoin traders remain too complacent about the impact of expiring put positions, despite increased demand for upside calls.
According to the firm’s analysis, since mid-January, Bitcoin’s total gamma ray exposure has become significantly negative, reaching around negative $3.2 billion around the $82,000 strike.
Negative gamma forces dealers to hedge in the direction of the market. When Bitcoin rises, dealers buy to maintain a hedge. I’ll sell when the price goes down. This dynamic can intensify both upswings and downsides, especially if a directional catalyst arrives.
10x Research said the same structure has helped keep Bitcoin locked in a narrow range in recent weeks.
According to the company, BTC’s gains have been met by covered call selling by yield-focused holders, while declines have been cushioned by put hedges.
As a result, the market repeatedly returned to the $78,000 to $82,000 area, although it fluctuated wildly during the day.
However, that balance could change as the May 29 and June 26 expirations approach. There is significant short-term put open interest at the May expiration, and June 26th is the largest expiration within this structure, with approximately $12 billion in notional exposure, with calls and puts roughly balanced.
If these positions expire without being replaced, the hedging pressure that has been restraining Bitcoin’s direction could weaken.
Considering the above, the level is easy. If BTC remains above $80,000 until expiration on May 29th, the short-term put overhang will decrease.
However, above $85,000, Bitcoin will cross the gamma flip level identified by 10x Research, which could change dealer positions, weakening the rally constraint and forcing defensive traders to chase the upside.
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