Bitcoin Price Prediction: Sell Signal at Key Resistance Risks Drop to $60K

Bitcoin (BTC) has dropped by 3% in the past 24 hours, as the token continues to trade in a narrow range between $68,000 and $72,000. However, a sell signal after hitting this key resistance suggests an upcoming drop.

The $71,000 area has been a highly contested level for both bulls and bears, and data from the options market may explain why.

This is near the “max pain” area for both call and put options expiring on Friday. What this means in practice is that a significant percentage of these options will expire worthless if the price stays within this range.

According to Deribit, the broker with the largest market share in the BTC options market, over $10 billion worth of these derivatives are at risk of finishing the week at zero unless the top crypto manages to finish above the $75,000 ceiling.

Considering how large the notional value of these instruments is, market makers could be behind Bitcoin’s recent back-and-forth moves.

In the past 24 hours, $200 million worth of long positions in the crypto market were blown up, the majority of which correspond to Ethereum (ETH) positions at $100 million, followed by $75 million worth of BTC longs.

Bitcoin Makes Bearish Double Top at $71,000

We have been keeping an eye on Bitcoin’s behavior after hitting the $71,000, and we just got a double top in the 4-hour chart that suggests that this sell wall could be strong enough to invalidate the latest relief rally.

Our target for a bullish breakout of this level was $85,000, but that thesis is no longer on the table unless the price decisively recovers during the American session today.

The Relative Strength Index (RSI) in this lower time frame just dropped below the 14-period moving average, which is typically interpreted as a sell signal as bearish momentum is gaining traction.

Paired with this massive upcoming options expiry, the odds of a strong drop to $60,000 have increased dramatically.

Fourth Sell Signal at $71,000 Indicates Persistent Selling by Whales and Institutions

Heading down to the hourly chart, we have been getting multiple sell signals lately every time BTC hits $71,000. Our signals system picks up a “decisional” candle. These are specific candle patterns that feature above-average volumes.

They tend to identify price movements that are accompanied by strong institutional and whale participation.

This latest sell signal would be the third one that pops up after BTC hits the $71,000 barrier. The top crypto has been unable to clear the $72,000 level lately, which makes this the ideal area to put a stop price for a short position.

If this sell signal is the definite one before a strong drop to $62,000, this creates room for a potentially attractive trade offering a 4x risk-reward ratio.

In this scenario, the optimal entry would be the $70,000 level as a psychological area of resistance that could be retested during the American session to raise the necessary liquidity for Bitcoin’s next leg down.