For the first time since September, Bitcoin dipped below the $40K mark. From the bullish side, the dip was quickly bought, but on the other hand, Bitcoin is still shaky 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 $39.5-40.8K range. Uncertainty is evident across the market, and still, there is not much demand in the spot markets. In the options market, max pain decreased to $50K. It’s advisable to monitor max pain 24/7 because it could change hour-by-hour due to the extreme price volatility.
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.
Looking at the Coin Destroyed Days (CDD, which measures spending intensity for older coins), it is evident that the old coins are not moving during the recent market plunge below $49K.
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.