Bitcoin has once again pulled back from its psychological $100,000 resistance level, trading around $94,500 after a sharp reversal overnight. Despite earlier optimism fueled by post-election momentum and institutional inflows, key technical and sentiment indicators now suggest the rally may be losing steam. In fact, there are growing signs that Bitcoin could enter a deeper correction — potentially dropping below $90,000 in the near term.
This analysis explores three critical warning signals currently shaping BTC’s price trajectory: a shift in options market sentiment, weakening U.S. demand reflected in exchange pricing disparities, and a bearish technical divergence on the RSI. Together, these factors paint a cautious picture for short-term traders while long-term bulls still find support in broader market fundamentals.
1. Options Market Signals Defensive Positioning
One of the most telling indicators of shifting trader sentiment is the 25-delta risk reversal (25RR) — a gauge that compares the demand for out-of-the-money call options (bets on price increases) versus put options (protection against declines). When calls are more expensive than puts, it reflects bullish positioning. Conversely, when puts dominate, it signals defensive or bearish expectations.
As of late November 2024, Deribit data shows Bitcoin’s 25RR has turned negative for the first time in at least a month. This means protective puts are now commanding a higher premium than speculative calls — an unusual shift given the recent rally toward $100K.
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Notably, this change coincided with increased activity in over-the-counter (OTC) markets. On Monday, traders on the Paradigm OTC desk were observed selling call spreads and purchasing put options, further confirming a move toward hedging rather than aggressive long exposure. Such behavior often precedes extended pullbacks, especially when momentum begins to wane.
Even longer-dated options for December and January expiries have seen their call premiums shrink relative to puts, indicating that sophisticated players aren’t betting on sustained upside just yet.
2. Coinbase Premium Vanishes Amid Weaker U.S. Demand
Another red flag lies in the fading Coinbase premium — a metric that tracks the price difference between Bitcoin on U.S.-based exchange Coinbase and offshore platforms like Binance. Historically, a positive premium indicates strong domestic demand from American investors, often driven by retail participation and regulatory clarity.
However, as of late November 2024, Bitcoin is now trading at a discount on Coinbase compared to Binance — a reversal not seen since before the post-election surge that pushed prices from $70,000 to nearly $99,500.
This negative flip suggests weakening appetite among U.S. buyers, possibly due to profit-taking after the rally or concerns over upcoming macroeconomic data and potential regulatory scrutiny. With fewer domestic buyers stepping in to absorb supply, offshore markets are setting the price tone — often leading to increased volatility and downside pressure during risk-off periods.
Additionally, order book data from major exchanges shows a bearish skew in open interest, with more sell-side liquidity stacked above current prices. This imbalance makes the market vulnerable to sudden drops if negative news emerges — such as unexpected regulatory actions or macroeconomic shocks.
3. Bearish RSI Divergence Hints at Momentum Exhaustion
From a technical perspective, one of the clearest warnings comes from the Relative Strength Index (RSI) on Bitcoin’s daily chart. While price briefly broke above $99,000 earlier in the week — marking a new local high — the RSI failed to confirm this move by reaching a corresponding peak.
This classic bearish divergence occurs when price makes higher highs but momentum oscillators make lower highs, signaling that buying pressure is weakening despite upward movement. In past cycles, such divergences have preceded corrections of 10% or more.
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Current intraday charts show immediate support levels between $87,000 and $88,000. If selling pressure intensifies and the $90,000 psychological level breaks, this zone could act as a temporary floor. However, failure to hold this range might open the door to further downside toward $85,000 — especially if broader market sentiment turns risk-averse.
That said, longer-term technical studies remain constructive. The weekly chart still shows Bitcoin trading well above its 200-week moving average, and on-chain metrics such as MVRV (Market Value to Realized Value) and NUPL (Net Unrealized Profit/Loss) suggest the asset is not yet in "extreme greed" territory.
FAQ: Understanding Bitcoin’s Short-Term Risks
Q: What does a negative 25-delta risk reversal mean for Bitcoin?
A: A negative 25RR indicates that traders are paying more for downside protection (puts) than for upside speculation (calls), signaling rising caution or bearish positioning in the options market.
Q: Why is the Coinbase premium important?
A: The Coinbase premium reflects U.S. investor demand. When BTC trades at a premium on Coinbase vs. offshore exchanges, it shows strong domestic buying interest. A disappearing or negative premium suggests weakening local demand.
Q: How reliable is RSI divergence as a reversal signal?
A: While not foolproof, bearish RSI divergence has historically preceded significant pullbacks in Bitcoin, especially after extended rallies without proper consolidation.
Q: Could Bitcoin still reach $100K despite these warnings?
A: Yes — short-term corrections don’t negate long-term bullish trends. If macro conditions improve or institutional inflows resume, the $100K level could be retested in early 2025.
Q: What level should traders watch for potential reversal signs?
A: Key support sits between $87K–$88K. A strong bounce from this zone with rising volume could signal renewed buying interest.
Q: Are these signs suggesting a full bear market?
A: Not necessarily. These indicators point to a likely correction or consolidation phase, not a structural breakdown. Long-term fundamentals like halving supply dynamics and growing adoption remain intact.
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Final Outlook: Caution Before $100K Breakout
While Bitcoin’s march toward six figures continues to capture headlines, the path may be bumpier than expected. The confluence of fading call demand in options markets, declining U.S. spot demand, and bearish technical divergence all point to increased downside risk in the short term.
Traders should prepare for potential volatility and consider risk management strategies such as scaling into positions or using stop-loss orders near key support levels. Meanwhile, long-term investors may view any drop below $90K as a strategic accumulation opportunity — provided broader market sentiment remains stable.
As always, monitoring exchange flows, derivatives positioning, and on-chain activity will provide early clues about whether this pullback is a healthy correction or the start of something more prolonged.
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