Bitcoin Faces Pullback, $90K Support in Focus as Technical Indicators Signal Potential Decline
Bitcoin (BTC) has encountered a significant pullback after failing to sustain its rally above the $100,000 level, now trading around $94,500. As the cryptocurrency markets take a breather, several technical signals are suggesting the possibility of further downside, with BTC potentially dipping below $90,000 in the coming days.
Negative Risk Reversal Indicates Bearish Sentiment
One of the first signs of weakening sentiment is the 25-delta risk reversal, which tracks the price difference between call and put options. On Deribit, calls have been trading at a lower valuation compared to puts, resulting in a negative risk reversal for the first time in over a month. This shift reflects growing hedging activity and a shift toward downside protection, indicating that traders expect further downside in the near term.
In addition, the market’s options activity has shifted toward bearish positions, with traders on the Paradigm OTC platform selling call spreads and buying puts, positioning themselves for more downside volatility. The divergence in call/put demand further reinforces the expectation that Bitcoin could see a deeper correction in the short run.
Coinbase Premium Disappears, Signaling U.S. Weakness
Another bearish indicator is the waning demand for Bitcoin from U.S. investors, previously a key driver of the rally. The premium that BTC typically commands on Coinbase compared to global exchanges like Binance has disappeared, signaling a decline in U.S. market enthusiasm. This shift reflects a broader cooling of demand, which was evident when Bitcoin’s price fell off the $100,000 mark.
The Coinbase premium’s evaporation is also tied to the changing order book dynamics, with sellers outpacing buyers, a signal that bearish sentiment is gaining traction in the U.S. market. As domestic demand weakens, Bitcoin faces increased vulnerability to negative news or a broader market correction.
RSI Divergence Points to Exhaustion of Bullish Momentum
Another bearish signal comes from the relative strength index (RSI), which measures momentum. Although Bitcoin briefly reached a new high of $99,000 last week, the RSI failed to confirm this upward move, indicating a divergence between price and momentum. This divergence typically signals that the bullish trend may be losing steam, increasing the likelihood of a pullback or consolidation in the near future.
Key Support Levels to Watch
Bitcoin’s immediate support is located between $87,000 and $88,000, a critical range to watch for any signs of stabilization. If Bitcoin fails to maintain these support levels, the price could continue to slide, with further declines expected. While the long-term outlook remains optimistic, the short-term trend is now uncertain, with Bitcoin at risk of further price volatility and downward pressure.
In conclusion, Bitcoin’s price action has stalled, with key technical indicators suggesting the potential for further declines. The negative risk reversal, weakening demand on Coinbase, and RSI divergence all point to a possible correction, with $90,000 serving as a crucial support level. Traders will be watching closely to see if Bitcoin can find stability or if further downside is on the horizon.
