Despite the impressive correction, the fear is still there

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Over the past few weeks, cryptocurrency markets have plunged due to macro-level fear (risk off). In this analysis, we will take a closer look at bitcoin price from a technical perspective, Onchain and Options Markt and discuss possible scenarios in the short to medium term.

Technical analysis

By: Shayan

Long term analysis

We can observe how the price is moving organically towards a larger corrective structure after the first phase of bullish impulse. A few swing highs and lows appear, which helps to identify a corrective structure.

Overall, the price of BTC has created a double top, an ascending channel, and a head and shoulders pattern from the all-time high region (November 10, 2021), giving us a confluence of selling.

Since November, the price of BTC has been in a downtrend, with shorter corrections. Consolidation may occur because we failed to hit previous swing lows, pushing the price towards prior period lows (HTF) and completing the whole pattern.

It is essential to wait and watch if a positive reversal price action forms until the price reaches the lower region (marked by the orange line on the chart above). These confirmations are important in determining if the price can restart another bullish leg.

Short term analysis

As the following 4-hour chart shows, the price is in a clear downtrend, which started since BTC reached ATH at $69,000.

The marked ascending trendline acted as substantial resistance to the price. Bitcoin has many important resistance levels en route to reclaiming the $40-50,000 price range, so it needs to form a higher pattern to rebound and start a new rally.

If the bears continue, the additional support level is the previous low in the higher frames, which is the $30,000 area.

On-chain analysis

By: Edris

One of the key metrics signaling impending bearish momentum in the fourth quarter of 2021 was the rise in derivatives exchange reserves.

Asymmetrically, spot foreign exchange reserves have been depleted over the long term, and this contradiction indicates that declines have been quickly bought and withdrawn from spot exchanges. It is therefore obvious that we are in an accumulation phase, which is bullish in the medium and long term.

Options market analysis

By: NEDA

This Friday, January 28, approximately $2.1 billion in Bitcoin options contracts will expire on Deribit. This is the most important expiration for this month.

The maximum pain price is $42,000 and the P/C ratio is 0.5. Based on extreme fear in the market and spot selling, option traders sold calls and bought puts to hedge against any downside due to the upcoming Fed meeting (19:30 UTC Wednesday). The P/C ratio has risen since January, indicating bearish sentiment in the options market.

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Cryptocurrency charts by TradingView.

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