Cryptocurrency markets have stabilized in the past few hours after a sharp correction earlier this week.
Bitcoin rose above $93,000 a few hours ago, but has now fallen slightly towards the $91,000 area.
The major cryptocurrency still supports the $90,000 key support level.
If this level is not maintained, Bitcoin could suffer further losses in the short term.
Analysts predict further dumping
Copy link to section
Bitcoin has been holding the $90,000 support level this week, but analysts are not optimistic about a short-term bounce.
Dr. Sean Dawson, head of research at on-chain options platform Derive.xyz, noted in an email to Invezz that there has been a spike in volatility across the market.
Short-term volatility (30-day period) rose from 41% to 49% in just two weeks, while long-term volatility (180-day period) stayed roughly in lockstep, rising from 46% to 49%.
Dawson added that BTC skew has also taken a significant hit. Skew is one of the clearest measures of sentiment because it captures the relative pricing of puts and calls, or downside protection and upside leverage.
The 30-day put skew has fallen from -2.9% to -5.3%, suggesting traders are paying more downside insurance as prices continue to soften.
“As we head into the end of the year, there is currently a significant concentration of BTC put accumulation around the Dec. 26 expiry date, particularly around the $80,000 strike. There is little macro backdrop for traders to remain bullish through the end of the year, as concerns about the resilience of the U.S. job market continue and the probability of a December rate cut could be slightly above a coin toss.”
Dawson concluded that Bitcoin prices continue to trend bearishly.
Options markets say there is only a 30% chance that Bitcoin will end 2025 above $100,000, but there is now a 50% chance that Bitcoin will end the year below $90,000.
Bitcoin finds support at psychological levels around $90,000
Copy link to section
The BTC/USD daily chart is bearish and inefficient as Bitcoin has underperformed over the past few days.
BTC started the new week on a bearish note, extending its decline by 2% and ending the weekly candlestick at $94,253, below the 61.8% Fibonacci retracement level.
The major cryptocurrency dipped to around $89,000 on Tuesday, but quickly rebounded from the key psychological level of $90,000, ultimately ending the day at $92,960.
At the time of writing, BTC is trading at around $91,600 per coin.
If the $90,000 support level holds, Bitcoin could extend its recovery towards the support-turned-resistance level at $94,253.
The Relative Strength Index (RSI) on the daily chart is close to oversold territory at 29, suggesting that bearish momentum remains strong.
The MACD line also remains within the bearish zone, indicating that sellers are still in control.
If the daily candlestick closes below the psychological level of $90,000, Bitcoin could extend the correction towards the next daily support level of $85,000.
