Home Cryptocurrency Bitcoin sells off after $44K resistance tap, eliciting scrutiny from options traders

Bitcoin sells off after $44K resistance tap, eliciting scrutiny from options traders

by Gordon James

After a week of consolidation, bitcoin is now trading below $4.5K as bears keep testing the waters for any potential buying opportunities around this price range.

The “bitcoin options expiry january 2022” is the expiration date for the bitcoin options that were put on the market in January. The tap of $44,000 was a resistance point and has caused Bitcoin to sell off.

In the most recent move to keep market players guessing about what’s to come for the biggest digital asset, Bitcoin (BTC), the price dropped more than 2% from local highs on January 12. 

1-hour candle chart for BTC/USD (Bitstamp). TradeView as a source

“A little bit at a time”

BTC/USD pulled down after reaching its highest levels in more than a week, according to data from Cointelegraph Markets Pro and TradingView.

Following the Wall Street open, a journey to $44,450 on Bitstamp was followed by an hourly candle that at one point caused losses of $1,500.

Bulls were let down following several predictions for a relatively simple squeeze into $46,000, a new indication that rangebound action is still the rule rather than the exception for Bitcoin.

There was still no obvious path, according to well-known trader and analyst Scott Melker.

On that day, he tweeted to his followers, “Still just chopping sideways,” adding that Bitcoin had hit record lows earlier in the week with its plunge below $40,000, which was also consistent with his own forecasts.

Another Twitter user, Daan Crypto Trades, added $45,700 as an additional upward goal significant for a resistance/support switch.

“The next region of interest on my radar is at the $45.7K mark. To turn that level in favor of the bulls, “He composed.

“BTC looks fantastic on LTF, but it still needs a lot of work on HTF before it can be considered a legitimate reversal. Taking things slowly.”

Others had higher expectations for a mid-term paradigm change.

Rekt Capital, a trader and analyst, said that “over the next few days and weeks, BTC may disclose a new market structure, in which case it would be well worth paying careful attention to it.”

A repetition of December’s “nuke” is cited by traders as a possible explanation for Bitcoin’s surge to $44,000.

The attention is focused on option traders.

Additionally, new study offered an explanation for why a drop at $40,000 was transient but a subsequent region of resistance at $44,000 persisted.

Options markets, which are now substantial enough to have a “major influence” on BTC price movement, are the deciding factor, according to cryptocurrency trading company QCP Capital.

“For instance, the few big players that possess strikes around those levels may be a major factor in the lack of follow through in BTC and Ether below $40,000 and $3,000, respectively. As they compete for positions to trade the differential there, they inevitably build support. And when they sell off those option positions, the market’s positive influence is also extremely evident “an update on Telegram said.

In addition, a savvy options trader who had purchased 42,000 January calls began selling them for a profit at the $44,000 spot level, inevitably causing some resistance.

According to Coinglass statistics, options open interest is still significantly below all-time highs for 2021.

Bitcoin sells off after $44K resistance tap, eliciting scrutiny from options tradersOpen interest chart for bitcoin options. Coinglass as a source

The “bitcoin options expire today” is a cryptocurrency that has been experiencing some turbulence in the past few days. The currency reached a resistance of $44,000 and then quickly dropped to $3,500. This caused a spike in volatility for bitcoin, which could be seen as an opportunity for options traders.

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