Bitcoin May Fall Below 90 Thousand Dollars

Hopes that Bitcoin (BTC) would break above $100,000 suffered a major blow as prices retreated to $94,500 overnight. Key indicators indicate that the cryptocurrency could decline to levels below $90,000.

The first indicator is the 25-delta risk reversal. The indicator measures the volatility premium of calls used to bet on price rallies relative to OTM put options that offer downside protection.

According to data platform Amberdata, call options expiring this Friday on Deribit are trading at a relatively cheaper valuation than puts, resulting in a reversal of downside risk. The negative reading, recorded for the first time in nearly a month, indicates a bias for hedging options.

Last week, options expiring in December and January traded at a larger premium than we are currently seeing.

BTC demand in the US is creating significant bullish pressure for the cryptocurrency, thus weakening the post-election bullish sentiment that propelled the asset from $70,000 to $99,500. This is evident from the fact that the price of bitcoin on Coinbase, which is listed on Nasdaq, is trading lower compared to Binance.

The negativity on the Coinbase premium indicator follows developments in order book skewness, which indicates vulnerability to potential negative news.

Relative strength index (RSI) divergence occurs when the price of an asset moves against its momentum oscillator.

Even though prices rose above $99,000 on Friday, a bearish trend was seen in the RSI. The model indicates that the upward momentum has run its course for now and there may be losses in the future.

Intraday charts point to support between $87,000 and $88,000, which means an anticipated deeper decline could find a bottom in this range as long-term technicals continue bullish.