Bitcoin Struggles to Hold Above $94K, Bearish Signals Point to Possible Drop Below $90K
Bitcoin (BTC) continues to grapple with its momentum, retreating to $94,500 after a failed attempt to break the $100,000 barrier. Despite earlier optimism, several technical indicators now suggest the possibility of further downside, potentially bringing BTC below the $90,000 mark in the short term.
Options Market Shows Weakening Sentiment
One of the most notable signals is the 25-delta risk reversal, a metric that measures the price difference between call and put options. For the first time in at least a month, Deribit’s BTC risk reversal has turned negative, with puts now trading at a higher premium than calls. This shift indicates that traders are positioning for downside risk, a sentiment that gained traction following the recent pullback.
On the over-the-counter (OTC) platform Paradigm, institutional traders have been observed selling call spreads and purchasing put options in response to the price decline. This adjustment shows that traders are increasingly bearish in the short term, with expectations of more volatility ahead.
Coinbase Discount Reveals U.S. Demand Weakness
The premium Bitcoin has historically commanded on U.S.-based Coinbase compared to international exchanges like Binance has evaporated. A negative Coinbase premium is now emerging, signaling that demand from U.S. investors—once a key driver for BTC’s recent rally—is weakening. This shift coincides with a broader bearish trend, as the market has grown more cautious following the recent price surge.
Additionally, a bearish skew in Coinbase’s order book further suggests reduced buying interest from U.S. investors, raising concerns about BTC’s ability to maintain its rally without sustained demand from this key market.
RSI Divergence Suggests Fading Bullish Momentum
Despite BTC reaching a new high above $99,000 last week, the relative strength index (RSI) failed to confirm this move, creating a bearish divergence. This divergence signals that the market’s bullish momentum may be running out of steam, increasing the likelihood of further price consolidation or declines in the near term.
Support Levels and Potential for a Deeper Correction
Bitcoin’s price is currently holding above key support levels around $87,000 to $88,000. If the market continues to slide, these levels could serve as a critical floor. However, if this support fails to hold, BTC could face further declines. While the long-term outlook remains bullish, the near-term trend is uncertain, and traders are bracing for continued choppiness.
In summary, Bitcoin’s recent retreat from the $100,000 level, coupled with weakening demand and bearish technical indicators, suggests a cautious outlook. Traders will be closely monitoring these key support zones to determine if the correction will stabilize or lead to further downside in the coming weeks.
