December was a tough month for the price of BTC, recording a monthly low on December 4 just below $42K, according to Bitstamp. A little more than one day remains for this year, and it seems that BTC will end 2021 beneath the $50K price mark.
Options Market Analysis
An important factor that should be considered in options market analysis, especially in noteworthy expiries, is the Max Pain Price.
Max pain price is the strike price that brings maximum loss to option buyers. Maximum pain theory says that an option’s price will gravitate towards a max pain price as the expiration date nears.
On Friday, 31 of December, massive expiry with a notional value of $5.4B will occur on Deribit Exchange. Max pain price is $47k. Even though it’s hard to speculate about the effect of a massive expiry on the BTC market, better be careful and take preventive actions for possible volatilities that may come immediately after.
After Bitcoin had recorded the current ATH of $69K on November 10, it rapidly got rejected and started a bearish move.
If we look at the MACD indicator, we can observe a bearish divergence with the price, which finally played out and led to a price drop. As can be seen on the chart below, the MACD indicator has recently confirmed a reversal of the mid-term bullish trend, as well as a reversal that took place just before the major crash of May 2021 (marked by blue vertical lines).
Currently, the BTC price is below the 100-Day Moving Average line (Green Line) and struggling with the 200-Day Moving average (Purple Line).
The latter serves as a historically significant support/resistance for the price. The blue trendline is currently the next significant resistance for the price, whereas the yellow trendline might be the next major support.
Further down, the $40-41K zone is the most robust support area in this range. If BTC drops below this level, this will result in a lower low, which is a bearish sign, and the way to $30K can be quick.
After the recent shakeout, bitcoin formed a reversal flag pattern (yellow trendlines) and broke it from the top, then a nice pullback to the upper trendline – and a breakout was confirmed.
However, the price also got rejected by the 200-MA line, and it seems like it started another leg down. Currently, the price is battling two major support zones – the blue trendline and the $45-46K level.
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Cryptocurrency charts by TradingView.