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Increased volatility, whale passivity and engulfing pattern: Bitcoin heads to local bottom

The new trading day on the Bitcoin market follows a bearish scenario. Bulls are losing positions, large investors are showing inertia, and Friday's expiration of $1 billion options leaves no chance for even the most ardent bulls to try to dump the price above $50k. In addition, the situation is complicated by the global technical picture, according to which the first cryptocurrency is heading right now to retest the local bottom set last Saturday.

Given the fundamental background around the main digital asset, we should not expect a full-fledged recovery movement to the $50k mark. At the same time, I admit an impulse movement above this threshold, but this may happen due to increased volatility in the market, and therefore it is not worth considering it in the context of the recovery period.

As of 11:00 UTC, the cryptocurrency is trading around $48.7k, where the support line and the Fibonacci level of 0.236 passes. Bitcoin exhibits weakness on the daily chart, and therefore I assume a breakdown of this boundary and further movement to the range of $42k-$45k.

The main argument in favor of further decline is the pattern of confident "bearish engulfing," which was formed on the daily chart of the cryptocurrency. And despite the sluggish attempts of the bulls to hold the line (the impulse growth of stochastic and the relative strength index), there is no doubt that the price will continue to decline.

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In addition to the technical picture, the activity of large capital indicates a further decline in the price. Institutional investors' passive behavior does not provide the market with the necessary volumes, which allows the price to decline to local lows without significant resistance.

Moreover, there is every reason to believe that the "whales" are again preparing to arrange a manipulative dump, since yesterday, December 9, the fifth largest influx of BTC to the exchanges in 2021 was recorded. A similar trend was observed before last week's collapse, when institutional investors transferred more than 18k BTC to platforms within a week. This increases the pressure on the price, which results in continued decline.

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The final chord, or rather the nail in the coffin of Bitcoin, is the expiration of options for $1 billion. The process is always accompanied by increased volatility, and therefore the opportunity itself to win back positions and enter the recovery stage can be leveled by a single impulse price drop.

With this in mind, I assume that we will fall to the local bottom on the upcoming weekend, after which we should expect a rebound from the $42k-$45k area, and further consolidation above $50k.

In the local picture, the cryptocurrency shows clear bullish signals, but the price is stuck between the 0.236 Fibo level, which it successfully overcame, and the downward resistance line of December 3. To break through the resistance area, a powerful impulse is needed, which large investors are able to give, but it is unlikely to expect active actions on the eve of an increase in volatility due to expiration.

Despite this, the MACD completes the formation of a bullish intersection and moves to zero. The stochastic and relative strength index is returning to the bullish zone, which indicates the development of a short-term upward momentum. However, the bears are confidently squeezing buyers near the level of downward resistance, which can be seen by the growing upper candlestick.

But there is still a chance for Bitcoin to push off from the current positions and try to turn around towards $52k. To do this, the asset needs to gain a foothold above 48.5k in order to make a local trend change within the day. However, as of 11:00 UTC, buyers do not have the necessary volumes, and therefore we are going to retest the local bottom near $42.7k.

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The material has been provided by InstaForex Company - www.instaforex.com

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