Bitcoin’s push past $100,000 seems to be on hold as prices dropped to $94,500 overnight, raising concerns of a potential dip below $90,000. Several key indicators are pointing towards further declines in the near future.
One important indicator to consider is the 25-delta risk reversal, which measures the volatility premium of out-of-the-money calls compared to OTM put options. Data from Amberdata shows that calls expiring this Friday are now trading at a lower valuation than puts, resulting in a negative risk reversal. This suggests a preference for protective puts among traders.
Additionally, the Coinbase premium, which has been a significant source of bullish pressure for Bitcoin in recent weeks, has evaporated. This indicates weakening demand for BTC in the U.S. market, as prices on Nasdaq-listed Coinbase are now trading at a discount compared to offshore exchanges like Binance.
Moreover, the relative strength index (RSI) divergence is signaling potential losses ahead for Bitcoin. Despite reaching a new high above $99,000, the RSI did not follow suit, diverging bearishly. This suggests that the bullish momentum may have peaked, paving the way for a possible downturn.
Intraday charts are pointing towards support levels between $87,000 and $88,000, indicating that a deeper decline could find some stability in that range. However, long-term technical studies continue to lean towards a bullish outlook for Bitcoin.
Omkar Godbole, a Co-Managing Editor on CoinDesk’s Markets team, highlights these indicators as potential warning signs for Bitcoin investors. While short-term fluctuations may lead to a drop below $90,000, the overall sentiment remains cautiously optimistic.
As investors navigate through the volatility in the cryptocurrency market, staying informed about key indicators and technical analysis can help make well-informed decisions. Keeping an eye on developments in the market and potential price movements can assist traders in managing their investments effectively.