Bitcoin Rallies Ahead Of Options Expiry

Bitcoin made significant gains for the first time in three days on Friday as traders and investors have been buying the dip, ignoring the record $6 billion options contracts expiry.

“Returns after prior bitcoin options expiration dates have tended to be positive,” David Grider, strategist at Fundstrat, told clients in an email. “The market is calm based on bitcoin VIX falling, with room to fall further.”

Bitcoin surged as high as $53,880 earlier today and is currently trading above $53,000, after plunging below $51,000 yesterday according to data from coindesk.com.

Uncertainty over vaccine rollouts across Europe, coupled with renewed lockdowns, and the underperformance of Asian equities cast a shadow over risk assets this month.

Technical analysis shows that an oversold signal on Thursday preceded a near 8% rise in bitcoin (BTC). (See chart.) The next level of resistance is around $55,000-$56,000 which could limit upside moves. Previous oversold signals on the hourly relative strength index (RSI) resulted in 5%-8% price recoveries. However, sellers have been active at key resistance levels this month.

Bitcoin’s uptrend has continued to weaken after breaking below trend support on the four-hour chart. The hourly chart remains in a downtrend defined by lower price highs as traders continue to take profit from intraday recoveries.

However, buyers are defending support around the $50,000 region. Additional selling pressure could stabilize around lower support at $42,000.