The flagship cryptocurrency, Bitcoin, is fast approaching $31,000 following its gains over the weekend. Analyzing this price action, crypto analyst Ali Martinez has predicted Bitcoinโs future trajectory as he suggests that the bears could regain dominance soon enough.ย
A Price Correction Imminent For Bitcoin
In a post shared on his X (formerly Twitter) platform, Martinez noted the potential head-and-shoulders pattern that was forming on the Bitcoin daily chart following its upward trend. This chart pattern has always been considered bearish as it suggests that a trend reversal might be on the horizon, meaning there could be a dip in prices soon enough.ย
Source: X
Confirming this assumption, Martinez stated that the daily chart (which he shared alongside the post) โhints at a possible sell signal emerging tomorrow [October 23].โ According to him, this prediction is backed by the TD Sequential indicator, which is flashing โa green 9 candlestick.โ The TD Sequential indicator helps traders identify the exact time of a potential reversal.ย
Martinez also alluded to the Relative Strength Index (RSI), which he mentioned has reached 74.21. He noted that this has been โa level triggering sharp corrections since March.โ An RSI of over 70 also suggests that Bitcoin may be overbought with a price correction imminent. This impending price correction can only be averted if Bitcoin manages to clock โa daily candlestick close above $31,560.โย
As of the time of writing, Bitcoin is trading at around $30,700, up by over 2% in the last twenty-four hours and a further 10% in the last seven days.ย
Options Market Could Contribute To Bitcoinโs Upward Momentum
In a post on his X platform, Alex Thorn, Head of Firmwide Research, highlighted the role that options traders (short gammas in particular) could play in driving Bitcoinโs price higher in the short term.ย
Source: X
He noted that the options market makers in Bitcoin are โincreasingly short gamma as BTC spot price moves up.โ This current positioning could help โamplify the explosiveness of any short-term upward move in the near term,โ considering that these short gammas have to buy more Bitcoin to stay โdelta neutralโ as Bitcoinโs price continues to rise.
From his analysis, Thorn was simply explaining that the option market makers will have to place โbuy ordersโ to hedge against their short positions as Bitcoinโs price continues to climb, thereby adding to buying pressure, which could cause the cryptoโs price to rise higher.
Meanwhile, he believes that the long gammas could provide a safety net for Bitcoinโs price in the event of a price reversal. These long gammas would have to buy back spots in order to remain delta-neutral, thereby providing support and helping resist any further decline (in the short term, at least).ย
BTC bulls running out of steam | Source: BTCUSD On Tradingview.com
Featured image from Crypto Buyers Club UK, chart from Tradingview.com
