Bitcoin falls to two-week lows as $6 billion in options set to expire — What’s next?
The price of bitcoin (BTC) has fallen 20 percent from its recent high of $62,000 in mid-March. Since cryptocurrency markets tend to be volatile, this could very well be another normal pullback in the current bull run.
Corrections are necessary to reinforce bullish momentum, as markets cannot go straight up. In addition, it is expected that on 26. March options will expire for a record $6 billion. The investment amount in the company’s assets is $12.5 billion, which often leads to volatility.
It is also very common for market dynamics to change after options expire.
The$53K level should be the support for stronger bullish momentum
4 hour chart BTC/USD. Source: TradingView
The 4-hour chart shows a clear downtrend from the recent all-time high at $62,000 with bearish support/resistance reversals.
Yet during the recent rally, the price of bitcoin broke through the critical resistance zone of $56,500 after Tesla announced that it was beginning to accept (and hold) BTC for its vehicles in the United States. As this price level could no longer be broken upwards, a retest of the support zone around $53,000 was inevitable.
Since the $53,000 support area is not very strong. After repeatedly testing the US in recent weeks, it is becoming clear that the level may not hold this time. That’s why the price is 25. March dropped to $51,500.
As a result, the bitcoin price is now expected to bounce between $53,200 and $53,800 to unleash another round of bullish momentum in the near future. If not, the next support zone should be between $49,500 and $51,500.
General structure continues to rise sharply
1 day chart BTC/USDT. Source: TradingView
BTC/USD’s daily chart remains dominated by a bullish outlook, showing successive higher lows and highs. From this perspective, a correction to $44,000 is in sight. The $18.5 billion would mean that the incremental construction would remain in place.
In this regard, the price of bitcoin currently enjoys great support between $49,500 and $51,500 and is unlikely to fall any further.
Moreover, the bearish divergence will only be confirmed when the market starts moving below the lows and highs below $44,000, as we have seen before.
Dollar shows strength
US Dollar Index US Dollar Index 1 day chart. Source: TradingView
The US dollar is showing strength again, while yields are also rising significantly. Not surprisingly, risky assets, namely commodities and cryptocurrencies, are also down.
A rebound in the US dollar is usually bearish for crypto markets, especially in the short term. But this recent rise in the USD is expected to be temporary as it encounters strong resistance. Moreover, the structure is still showing lower lows and lower highs, which means that a trend reversal should be expected relatively soon.
So as the dollar’s momentum comes to a halt, the cryptocurrency markets and a greater rise in bitcoin become more likely.
The four-hour chart of bitcoin shows a downtrend with a retest of $53,200-$53,800 likely to be rejected. Therefore, the most likely scenario when building up the current price is a lower level in the near future.
The green area in the chart above is where we could see a potential bullish divergence or an immediate uptrend. If such a move occurs, the ideal scenario would be for the bulls to reach higher levels.
Once this upper limit is reached, the price of bitcoin will continue to rise at the following rates of $68,000 and $82,000.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.
frequently asked questions
What happens when bitcoin options expire?
The expiry of the deadline could make a possible sale more difficult. Simply put, carry trades would square off: Short-term positions in the futures markets are closed or may expire and long positions in the cash market may be sold, leading to greater price volatility.
What happens to bitcoin at the end of 2020?
Bloomberg Research 2020 Bitcoin Report Bloomberg Research recently released a new report on the future of bitcoin as an investment. According to a major media center and financial terminal, bitcoin is expected to reach $12,000 and $20,000 by the end of 2020.
Why has the price of bitcoins dropped so much?
1. Funding Stress. … So there was always the risk of a funding reset. According to data source Coinalyze, the price drop has so far eliminated more than $300 million in bitcoin longs – about 30 percent of the total $1.33 billion in liquid longs in the crypto market.