Three Reasons Why Bitcoin Risk Dropped Below $90K

Bitcoin’s (BTC) much-anticipated rise above $100,000 is still unattainable, with prices falling to $94,500 overnight. Fundamental indicators point to potential further declines to sub-$90,000 levels.

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

According to data source Amberdata, calls expiring on Deribit on Friday are now trading at a cheaper valuation than puts, causing risk reversal to the downside. The first negative reading in at least a month indicates a bias towards protective purchases.

Perhaps savvy traders are preparing for a continuation of Monday’s price decline. On Monday, traders sold call spreads and purchased put options tied to BTC on the over-the-counter liquidity network Paradigm.

The 24-hour change in 25RR (risk reversal) indicates that the call trend is moderating across time frames. Last week, calls expiring in December and January traded at a larger premium than we’re seeing now.

Coinbase premium evaporates

State demand for BTC, which was the leading source of bullish pressure for the cryptocurrency during the price surge from $70,000 to $99,500 following the recent US elections, has weakened. This is evident from the renewed discount in BTC prices on Nasdaq-listed Coinbase compared to offshore giant Binance.

The negative change in the so-called Coinbase premium indicator tracks bearish order book skew and indicates vulnerability to potential negative news.

RSI divergence

A relative strength index (RSI) divergence occurs when the price of an asset moves in the opposite direction of its momentum oscillator.

In the case of BTC, prices reached a new high above $99,000 on Friday, while the RSI failed to do so, showing a bearish trend. The pattern shows that the bullish momentum remains on course for now and losses may occur in the future.

Intraday charts show support between $87,000 and $88,000; This means that a deeper decline could find a basis in this range as long-term technical studies continue the upward trend.