Bitcoin is approaching the key support area between $86,000 and $88,000. The previous local high, which was not retested during the earlier ascent, is situated here. Once BTCUSD reaches $86,000, the price gap will be eliminated, potentially initiating another phase of upward movement. Historically, such reversals tend to be rather slow and last for weeks, with quotes consolidating within a wide ascending channel for an extended period.
An analysis of options levels and market sentiment, open interest in perpetual Bitcoin futures fell by 17% over the week. This indicates a decline in new contracts and, more importantly, the closure of existing positions—a sign of waning enthusiasm for the current trend.
Furthermore, funding rates on major exchanges have turned sharply negative, reflecting a dominance of short positions and suggesting a short squeezing phase.
In addition, Bitcoin has entered a backwardation phase, with futures trading below the spot price. This typically signals active hedging and often precedes a market bottom. The Fear and Greed Index is at 15, indicating “extreme fear.” Historically, such levels have been seen before major rallies.
Despite the correction, long-term cryptocurrency holders are likely continuing to accumulate the asset. Combined with increasing scarcity (19.95 million BTC mined to date), this points to a broader bullish cycle. The current decline does not undermine the constructive medium-term trend. The backwardation scenario and “extreme fear” sentiment, as mentioned, often serve as precursors to an upward reversal.
The overall recommendation is to buy Bitcoin from the $86,000 level. Profits should be taken at $107,000. Stop Loss could be set at $79,000.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
