Bitcoin, the leading cryptocurrency, has been steadily approaching the $31,000 mark after notable gains during the weekend. Crypto analyst Ali Martinez has examined this price movement and offered insights into Bitcoin’s potential future direction. According to Martinez, there is a possibility of bears regaining control in the near future.
Potential Bearish Pattern on Bitcoin’s Horizon
Crypto analyst Ali Martinez took to his X platform (formerly Twitter) to point out a potential bearish pattern emerging on the Bitcoin daily chart. This pattern is known as the head-and-shoulders pattern, often signaling a forthcoming trend reversal and a potential price dip.
Martinez went on to predict that a sell signal could materialize on October 23, based on the daily chart and the TD Sequential indicator, which indicated a green 9 candlestick, a signal for a potential reversal.
The analyst also highlighted the Relative Strength Index (RSI), which had reached a value of 74.21. Martinez noted that this level had previously triggered significant corrections since March. An RSI over 70 suggests overbought conditions and hints at an impending price correction. However, Bitcoin could avoid this correction by achieving a daily candlestick close above $31,560.
At the time of writing, Bitcoin was trading at approximately $30,700, with a 2% gain in the last 24 hours and a 10% increase over the past seven days.
Options Traders Impacting Bitcoin’s Short-Term Price
Alex Thorn, Head of Firmwide Research, shared insights on how options traders, particularly those with short gamma positions, could influence Bitcoin’s short-term price movements. He pointed out that options market makers are increasingly short gamma as the Bitcoin spot price rises.
This short gamma positioning can potentially amplify the intensity of any short-term upward movements. Short gamma traders must buy more Bitcoin to maintain their “delta-neutral” status as Bitcoin’s price continues to climb. This added buying pressure has the potential to drive Bitcoin’s price even higher.
Thorn also mentioned that long gamma traders could act as a safety net if there’s a price reversal. In this scenario, long gamma traders would need to buy back Bitcoin to remain delta-neutral, providing support and potentially preventing further declines, at least in the short term.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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