Options Market Analysis
Omicron fears caused bitcoin’s price to drop to $42K on December 4, but it has not moved higher than $52k in the past month. BTC trades at $47k. The current ATM-implied volatility, which peaked at 94, is short-dated at 66.
The highest open interest is for calls for $50K strike prices, which are available for expiries on January 7, 3 and 7. These expiries saw a lot of sales in the past few days. Option traders were not optimistic about a price increase of more than $54K due to low demand in the spot markets. This is evident for the expires in January’s first week.
Bitcoin is making a pullback to the broken trend lines (yellow ones) on a daily basis. This includes price and RSI. However, we cannot yet declare that the correction has ended. The price must make a higher high, break the blue trend line on the price chart and RSI. The resistance in RSI lies at the intersection of baseline 50 and SM100. Crossing it means bears have gotten out of the market.
The price fluctuates in a rectangular (yellow box) pattern on the shorter timeframe. The break of the RSI and MA21 downtrends could provide a safety zone in the short-term. This happened on December 21st, which led to an 11% rise.
The futures market is neutral to negative, but the on-chain data shows that both the long-term and mid-term indicators are positive. The weekly average number of active users is increasing, along with the ongoing hashrate recovery. This shows that there is still demand for the market and could be a catalyst to a rally.
Marla Brooks – Financial Analysis
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