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01.12.202117:08 Forex Analysis & Reviews: Uncertainty of long-term bitcoin holders and excitement in the options market: why a correction of BTC to $ 50,000 is still possible

Bitcoin ended November on a bearish note, which does not cause much concern among investors. The main lines of the long-term upward trend remained intact, and the global charts of the asset are full of technical analysis figures that guarantee a bullish rally to new peaks. However, over the past two weeks, investor confidence has been shaken from a fundamental point of view. And let this not cancel out the upcoming bullish rally. However, I admit the probability of another decline in the area of $52k-$53k.

Summarizing my position, I want to note that the main argument why bitcoin may fall into the danger zone again is the lack of a single line of behavior for long-term investors. Glassnode cites entertaining figures according to which investors with wallets of 10-100k BTC broke their vow of inactivity and began to purchase bitcoin coins (50k coins in the last week). However, despite this, there is a trend according to which long-term holders did not approach the maximum reserves in October 2021.

This suggests that there is no unequivocal confidence in a bullish rally among the main audience of BTC. From the global perspective, this will not prevent an upward trend, but it indicates a local transition of some large holders into inactivity mode, which may put additional pressure on the price. The on-chain metric of the number of active unique addresses in the bitcoin network has also acquired a downward movement during the price decline. This confirms the assumption about the inaction of a part of the audience of the crypto asset. Most likely, this is also due to a decrease in the hype around the coin and, accordingly, the number of speculative positions. Therefore, I see this as a long-term positive signal to a short-term negative effect.

Exchange Rates 01.12.2021 analysis

It is also worth noting the growth of open interest in bitcoin options to the level of 400k BTC, which is fraught with a sharp change of course and mass liquidation of positions. Glassnode believes that a short-squeeze may occur and the price will start an upward movement. Taking into account the testing of the bottom in November, the completion of the correction looks like a logical continuation of the bull market. However, on November 30, an alarming event occurred, which may indicate a new retest of the local bottom. The coin tried to gain a foothold above $57k, but later the bears continued to put pressure on the price and brought it to $55.8k, where buyers began a powerful buy-off and as a result, the four-hour candle closed at $57k. Subsequently, there was a bullish breakdown of $57k and consolidation above $57.8k, where a local support zone was formed.

Exchange Rates 01.12.2021 analysis

The concern is that an almost equal ratio of longs and shorts in the options market can be dangerous for bitcoin due to the risk of manipulation. I believe that if the price is successfully fixed above $60k, the probability of a decline below $55k is almost completely leveled. However, with a record-high interest in options, it is not necessary to exclude the psychological component and manipulative price understatement. Bitcoin will not break through $60k on the second attempt, and therefore it is worth carefully monitoring the reaction of bulls to the pressure of sellers. And if the main support levels of $58.7k, $57.7k, $56.5k, and $55.5k are broken, then the local bottom will probably be pushed back to $52k, and possibly lower for $50k. This will already call into question the medium-term upward trend from $40k.

I do not rule out such a scenario because of the excessive hype around options, as well as the partial uncertainty of the bulls in the further rally. If all this is multiplied by the fear and greed index at around 34, which means fear, then this option cannot be ruled out. We are monitoring the situation and especially the reaction of bitcoin to the Fibo level of 0.382 in the area of $60k. I don't believe in a permanent breakdown of the line, but the further reaction of the price and buyers is much more important. We can get out of the current correctional structure, or we can aggravate it.

Exchange Rates 01.12.2021 analysis

Artem Petrenko,
Especialista em análise na InstaForex
© 2007-2022
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