Analysts consider Bitcoin’s strong rejection at $44,000 as further evidence that the derivatives market plays an important role in the asset’s price dynamics.
Market Update
Bitcoin (BTC) has dropped more than 2% from its January 12 domestic high in the latest move to keep market participants guessing on what is to come for the major digital asset. Best.
“One Step at a Time”
Data from Cointelegraph Marketplaces Professional and TradingView tracked the BTC/USD retracement after the pair hit a high in more than a week.
A trip to $44,450 on Bitstamp after Wall Street opened was followed by an hourly candle, which at one point caused a loss of $1,500.
A fresh sign that range activity remains in order for the day for Bitcoin, the bulls were disappointed after several calls for a fairly easy price level towards $46,000.
For prominent analyst and trader Scott Melker, “there is still no clear sign of direction.”
“Still just interrupting,” he told Twitter followers that day, noted that Bitcoin hit a low with a drop below $40,000 earlier in the week, which also aligns with his own prediction.
Another member’s Daan Crypto Trades Twitter account also marks $45,700 as a very important upside target for a resistance/support flip.
“The $45.7k level is the next area of interest on my radar. It will be the key to flip that level for the bulls,” he Written.
“BTC looks great on LTF but there is still a lot of work to be done on HTF to call this a proper reversal. One step at a time.”
Others are more hopeful of a paradigm shift in the medium term.
“In the coming days and weeks, BTC could reveal a new market structure, in which case it is well worth paying attention to,” said trader and analyst Rekt Funds. forecast.
Related: Traders Say Bitcoin’s run to $44K could be a gentle bounce, citing December ‘kernel’ repeat
Options traders come into the limelight
New research also shows why $40,000 was short-lived and $44,000 turned into a resistance area afterwards.
According to crypto trading firm QCP Funds, the deciding factor lies in the options markets, which have now become important enough to have a “significant impact” on BTC’s price action.
“For example, a major reason BTC and Ether lacked following at below $40,000 and $3,000 could be because some of the big players own strikes around those levels. They naturally create support when they bid on plain trading spots there. And as they take profits on those options positions, the upside impact on the market is also evident,” a Telegram update explained.
“Also, a keen options player who bought 42,000 calls in January has started taking profits on trades around the $44,000 spot level, naturally creating some resistance there.”
Data from Coinglass shows that options open interest is still far from its all-time high in 2021.
