• Despite Bitcoin’s recent price drop to $63,600 and ongoing bearish conditions, the derivatives market shows strong buying interest at dips, with a notable increase in call option purchases on Deribit.
• BTC faces short-term bearish pressure and risks retesting the $60,000 support level amid prevailing market fear, uncertainty, and doubt (FUD).

The world’s largest cryptocurrency Bitcoin (BTC) continues to face strong selling pressure with the BTC price dropping another 3.62% slipping to $63,600 as of press time. However, the Bitcoin derivatives data shows that there’s strong buying at every dip amid the rising Open Interest (OI).

Despite the ongoing price weakness, the flow of Bitcoin options on leading exchange Deribit has been heavily skewed toward call options at strike prices well above the current market rate. This may indicate that sophisticated investors are anticipating a significant price increase.

“In the options market, we observed an unusually large buying flow of December and March expiry $90-$100K calls in the last 24 hours. We believe this suggests the market is calling the bottom and positioning itself for a sustained rally, potentially lasting into 2025,” Singapore-based QCP Capital stated in a market update.

This increase in buying interest shows that investors are anticipating greater than one Fed rate cut by the end of the year. Investor sentiment is heavily influenced by speculations about the Federal Reserve’s monetary policy. A Reuters poll suggests a possible rate cut in September, though there is a risk of fewer cuts or none at all.

Historically, Bitcoin tends to benefit from a bullish stock market, which could be spurred by Fed rate cuts. However, Federal Reserve Chair Jerome Powell remains cautious, and economic indicators add further uncertainty to the outlook.

A Reading of Bitcoin Chart

In an analysis posted on TradingView on June 21, crypto trading expert TradingShot highlighted a giant cup and handle (C&H) pattern on Bitcoin’s one-week time frame chart, which started forming at the peak of the previous bull cycle.

The cup and handle pattern, a bullish continuation signal, suggests potential price increases. However, the analyst noted it is often overlooked by traders focused on short-term movements. Currently, Bitcoin’s chart is in the handle phase, forming a downward channel.

The analysis emphasized the importance of identifying which moving average (MA) period will provide support: the 1-day MA200 (1D MA200) or the 1-week MA50 (1W MA50). The 1D MA200 provided early support during the current bull cycle and was a strong rebound point during the week of March 6, 2023.

Conversely, the 1W MA50 has been a reliable support level since the breakout on March 13, 2023, and approached the price action around the week of September 11, 2023.

Despite the bullish price projections, Bitcoin still has significant hurdles to overcome to dispel short-term bearish conditions. The cryptocurrency is at risk of retesting the $60,000 support level. Currently, Bitcoin is experiencing fear, uncertainty, and doubt (FUD) amid ongoing sideways trading.