Monthly outlook

Based on the monthly time frame, the market has not yet shown any strength. Let’s take a look at the market structure using the trend lines and indicators in the chart below.

If we compare the current cycle (2021) with the previous cycle (2017), the RSI is still in an uptrend with a lower slope (marked in green).

During the 2017 bull run, a break below the uptrend line signaled the end of the bull run (red vertical line). The same thing happened in May of this year when the RSI broke below the medium-term uptrend line (dashed blue). However, the long-term uptrend line continues, so it remains to be seen whether reaching a new all-time high will be the end of the bullish phase that started in July.

The stochastic RSI is currently near the oversold zone. We still have to wait for this indicator to form a bullish cross, which marks the start of a strong uptrend (green vertical line). Further confirmation is a breakout of the RSI above the downtrend line (yellow dashed line).

It is likely that BTC price will enter a volatile phase for a while before gaining the momentum necessary for a strong uptrend. Such an uptrend usually requires a fundamental catalyst (positive news) or a wave of new entrants.

BTC / USDT monthly chart | Source: TradingView

Short term outlook

The yellow zone is an important area of ​​resistance on the path to Bitcoin’s recovery. This zone is combined by a downtrend line, a horizontal resistance and the 100 MA (4 hour frame). Ten days ago, Bitcoin struggled to break above the downtrend line and after failing to break it, BTC plunged to $ 42,000 (December 4th). Therefore, a break above this resistance could confirm that the short term downtrend is over.

BTC / USDT 4-hour chart | Source: TradingView

Analysis of the options market

This Friday, December 17th, Bitcoin option contracts worth approximately $ 662 million on Deribit will expire. The maximum discount is $ 50,000 for this expiration. Call options at a strike price of $ 60,000 have the highest open interest and many calls are sold at that strike price.

To better understand options traders activity in December, we can look at the trend in total filtered volume specifically for the December expiration dates. Put / call ratio increased this month, which means options traders still want to hedge against market declines.

The weekly TOP change in Open Interest (OI) shows many call options with a strike price of $ 60,000 that expires on December.

On-chain analysis

One fascinating on-chain metric to watch for over the past few weeks is BTC’s hash rate. The network’s hash rate soared again after the massive exodus of miners to North America shortly after China banned mining.

This healthy and steady trend shows the firm confidence new investors have in the mining industry. New miners don’t react to market sentiment and just care about mining as much as possible. In other words, they are bullish on BTC over the long term.

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