Key Points
- Bitcoin [BTC] has maintained a price range between $100K and $105K following Trump’s inauguration.
- Options traders are predicting potential drops to $90K and $96K levels.
Bitcoin [BTC] has held steady at the $100K level after the initial turbulence surrounding Trump’s inauguration.
Over the last couple of days, BTC has fluctuated within the $100K and $105K range.
On-chain Metrics Indicate Possible Breakout
Key on-chain metrics suggest a possible breakout from this price range. What could this mean for BTC in the short term?
BTC’s recent price activity has been confined to the $90K-$108K upper range. Although the 50-EMA (yellow) on the 4-hour chart has been used by bulls for short-term re-entry, key chart indicators show signs of weakening.
The Directional Movement Index (DMI), for example, indicates that short-term momentum has significantly decreased (red line above green), which could encourage short-sellers.
Similarly, the 4-hour RSI was below 50 at the time of writing, suggesting a decrease in demand, possibly due to caution following the inauguration.
Impact on BTC Levels
These bearish readings could threaten the $100K support and mid-range. If these levels are breached, BTC could potentially drop to $96K or even $92K.
However, the liquidation heatmap does not support this outlook. At the time of writing, there was a significant amount of liquidity (bright yellow) at $109K.
This suggests that many traders are shorting the asset at its recent all-time high. Consequently, this large liquidity could serve as a price magnet, pushing prices upward and potentially defending the $100K level once more.
Despite the cautious sentiment in the spot markets, the Futures market remains bullish.
According to QCP Capital, an Options trading desk, there are more bullish bets than bearish ones on the Futures side. The firm stated that “BTC futures continue to trend upward, especially on the front end, as market’s net-long exposure from last week remains solid. Bullish bets currently outpace bearish ones by a ratio of approximately 20:1.”
A look at Deribit’s next key Options’ expiry (31st January) reveals that the $110K and $120K levels have the highest Open Interest for calls (bullish bets), making them key bullish targets by the end of January.
On the downside, $90K (highest puts, bearish bets) and the max pain point of $96K are key levels expected by Options traders for potential sharp drops.
In summary, the market is predicting price swings within the $90K-108K range, with a possible deviation to $110K.
Please note that the information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
