For the first time since September, Bitcoin has fallen below the $ 40,000 mark. On the bullish side, the bottom was quickly bought up, but on the other hand, Bitcoin is still fragile and still at risk of losing the coveted mark.
Options Market Analysis
After a large options expiry event at the end of 2021, Max Pain jumped to $55K. These days, the selling pressure of the spot market pushed BTC to plunge and then temporarily lose the $40k as support (as of now).
Bitcoin is now trading in the range of $ 39.5- $ 40.8,000. Uncertainty is evident throughout the market, yet there is not much demand in the spot markets. In the options market, the maximum pain has decreased to $ 50,000. It is advisable to monitor maximum pain 24/7 as it might change hour to hour due to extreme price volatility.
Technical Analysis
Most traders expect $40K to act as solid support for bitcoin. Today, bitcoin lost this support momentarily (wicked below it). Overall, losing the $40K support on the daily time frame for bitcoin would send a bearish signal to speculators, leading to retesting the $37k and then $30-32K zone the following support levels.
Since November 15, according to the Directional Movement Index (DMI), by moving the -DI line (red line) above the + DI line (green line), the market has entered a downtrend.
The strength of this downtrend can be mapped by the ADX parameter (orange-red, which indicates the current trend’s strength). Historically, values above 25 signal a strong momentum. For now, ADX is at 39.9, which confirms a relatively bearish momentum in the market. The next daily candle will be crucial – a close above $40K support might initiate a temporary correction to $44K.
Chain analysis
Looking at the Coin Destruction Days (CDD, which measures the intensity of spending on older coins), it is evident that older coins are not moving during the recent market drop below $ 49,000.
The 7D moving average of CDD is almost similar to the June – July period, where the market was in a capitulation phase before the recent rally to $69K.
