Three Reasons Bitcoin May Drop Below $90K
Bitcoin traders may be feeling a bit on edge after a recent price drop of 5%. Some are opting to purchase protective put options in response to this decline. Additionally, a key indicator known as the Coinbase premium indicator is signaling a decrease in demand for Bitcoin in the U.S. market. This indicator is often used to track the difference in price between BTC on Coinbase versus Binance, and right now, it’s showing a weaker interest from U.S. buyers.
Looking at the daily chart, there’s a bearish RSI divergence, indicating potential weakness in price momentum. This suggests that Bitcoin’s much-anticipated breakout above $100,000 may be further out of reach, with prices potentially falling below $90,000.
One indicator to watch is the 25-delta risk reversal, which measures the volatility premium of out-of-the-money calls versus put options. Currently, calls expiring this Friday are trading at a cheaper valuation than puts on Deribit, resulting in a negative risk reversal, indicating a preference for protective puts.
Traders are also eyeing the Coinbase premium indicator, which shows a discount in BTC prices on Coinbase compared to Binance, suggesting a decline in U.S. demand for the cryptocurrency. This is a factor that has been instrumental in driving up Bitcoin’s price in the past, making it a key metric to keep an eye on.
Lastly, the RSI divergence on Bitcoin’s daily candlestick chart is worth noting. While prices reached above $99,000, the RSI did not follow suit, diverging bearishly. This suggests that the bullish momentum may have peaked for now, potentially leading to more losses in the near future.
Intraday charts show support between $87,000 and $88,000, indicating a possible floor for a deeper decline. Despite short-term uncertainties, long-term technical studies still point towards a bullish outlook for Bitcoin. It’s important for traders to stay informed on these indicators and be prepared for potential price movements in either direction.
