Bitcoin’s $90K Resistance Faces Strain as Options Expiry and Bearish Sentiment Take Hold

Bitcoin (BTC) is trading under $87,000, displaying little action in the last 24 hours. Traders are nervous about the anticipated expiration of an all-time-high $16.5 billion monthly options on Friday, March 28th. The expiry will likely spur a lot of volatility in the market as Bitcoin struggles to cross the key $90,000 resistance level. Both technical signals and market mood point towards a potentially volatile phase ahead for BTC.

Effect of the $16.5 Billion Options Expiration on Bitcoin Price

The forthcoming $16.5 billion options expiry will impact Bitcoin’s price action significantly. There is a greater open interest in call (buy) options at the moment, with $10.5 billion worth of calls against $6 billion in puts (sell options). A lot of the calls, however, are positioned above $92,000 strike prices, so Bitcoin needs to increase by 6.4% from its current position for them to become profitable. This renders immediate bullish expectations unlikely.

Bears can try to push the price down below $84,000 prior to the expiry since this would make put options more valuable and potentially exert further downward pressure on Bitcoin. This bear-bull tug-of-war is likely to cause huge volatility in the short term.

Pressure to Sell by Short-Term Holders Helps Weigh on Bitcoin

Bitcoin has been under constant pressure to take selling from short-term holders (STHs), who have retained their BTC for fewer than 155 days. Such investors purchased Bitcoin at higher prices and now face large losses. Therefore, most are opting to sell, which puts pressure on the price of Bitcoin.

Based on Glassnode statistics, the amount of Bitcoin in short-term holders at a loss is at its peak since July 2018, indicating the intensity of selling pressure in the market. This persistent sell-off has hindered the ability of Bitcoin to sustain a bullish trend, particularly in light of other challenges in the market.

Liquidity Fall and Failure of Fresh Demand Blocking Bitcoin’s Rise

Aided by the decline of Bitcoin, the market liquidity has also been contracting. The onchain transfer volumes are down by 47% compared to their heights in Bitcoin’s past all-time highs, while the active addresses are also diminishing. Furthermore, open interest on Bitcoin futures has witnessed a considerable decrease, pointing to falling trade volumes.

These, along with a paucity of new demand coming into the market, indicate that Bitcoin could have difficulty breaking above higher levels. The cost basis breakdown indicates concentration of supply at higher levels, but without heavy buying on lower levels, recovery in price is not easy.

Technical Resistance Levels: Major Obstacles for Bitcoin

Technically, Bitcoin has major resistance between $88,700 and $92,000, where the 50-day and 100-day Simple Moving Averages (SMAs) are located. Breaking through this resistance would be essential for Bitcoin to keep rising towards the $100,000 level. But if Bitcoin cannot break through this level, it could be exposed to major downside risks.

Conclusion: Bitcoin Undergoes Critical Test with Key Resistance on the Horizon

The price of Bitcoin is at a decisive spot as it deals with the upcoming options expiry and tries to overcome the $90,000 barrier. Short-term holder selling pressure, decreasing liquidity, and general macroeconomic uncertainty all provide the major hurdles that Bitcoin has to overcome. The success of the options expiry and Bitcoin pushing through significant resistance points will decide the direction of its near-term price action. Investors need to keep a close eye on these events to understand the direction that Bitcoin is going to take in the future.