Bitcoin’s price movements have been dramatic throughout the year. After reaching a current all-time high of $126,000 in early October, the world’s leading cryptocurrency has suffered a sharp decline. Since reaching its peak in October, Bitcoin has fallen to $80,500, a negative deviation of more than 15% when examining year-over-year growth.
With market sentiment seemingly trending bearish, a recent on-chain analysis was released, giving reason to believe that negative sentiment among investors could grow stronger.
$91,000 maximum complaint breached after option expiration Friday.
In a post on CryptoQuant’s QuickTake, cryptocurrency expert GugaOnChain highlighted the expiration of approximately $3.4 billion in Bitcoin options. This expiration event, which occurred on Friday, December 5th, is the event that triggers the “gravity” that typically pulls prices down. Furthermore, the price tends to move to a certain price level, called the maximum pain point, where option buyers suffer the most losses and sellers gain the most profits.
The biggest problem in this scenario was approximately $91,000. Therefore, the price of Bitcoin fell sharply towards this point. However, by the end of the session, Bitcoin had already slipped below “gravity”, reaching a low of $89,500 and entering a range that would amplify the losses of buyers while maximizing the profits of sellers (market makers).
Negative funding rates further strengthened the bearish narrative.
GugaOnChain also references readings from its Bitcoin: Funding Rate metric, which tracks the average funding rate of all major perpetual futures exchanges. As the analyst explains, this indicator is useful for reading the prevailing market sentiment. For example, a negative funding rate, like the current -0.001206, generally indicates the willingness of short traders to pay long positions for their positions. So it is clear that market sentiment is more bearish than bullish.
There appears to be a coincidence between negative financing rates and selling pressure from $3.4 billion in expired options and a $91,000 maximum pain point violation. GugaOnChain explains that this correlation further strengthens the narrative that the price of the Bitcoin market could fall further significantly.
While the long-term market direction is well defined, short-term sentiment reflects a more dovish stance of extreme caution. As of press time, Bitcoin is worth approximately $89,250. Over the past 24 hours, the top cryptocurrency has lost around 3.38% of its value, according to CoinMarketCap data.
Featured image from Shutterstock, chart from Tradingview
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