This post covers detailed Bitcoin analysis, highlighting key trends and projections for March 2025.
Bitcoin reached a historic milestone of $100,000 in December 2024. Following which, it formed another top in January 2025. Since then, Bitcoin has experienced significant volatility, fluctuating within a 20% range.
The recent change in the US presidency has significantly boosted cryptocurrencies.
Bitcoin Analysis – Price Action
After a strong uptrend, bitcoin is consolidating. A Hammer candlestick pattern is being formed on the monthly candle of Feb 2025. Lower wick of the candle shows the presence of buying pressure around $90,000 forming a good support level.
Analyzing Bitcoin on a weekly timeframe, post consolidation for 8 months, bitcoin rose about 75% to $109,000. After this strong uptrend, it seems to be consolidating again forming a Pennant chart pattern, which is a continuation pattern.
Another possibility is that bitcoin goes into deep consolidation forming a rectangle pattern before giving a breakout on either side. This situation is highly probable as we have already seen a bull run and global uncertainties might prevent further advance of bitcoin.
It is important to note a rectangle can break out either side. We are left with following options:
- A bullish breakout of pennant, wherein we wait for such breakout with volumes.
- If consolidation continues, we take reversal positions near support and resistances and wait for a breakout on either side.
Option Chain for Bitcoin Analysis
The above image is the option chain of Bitcoin with Feb monthly expiry. We can see maximum call writing at $100000 and put writing at $96000 which will act as immediate resistance and support for bitcoin forming a short range.
Also, Bitcoin is also forming a bigger range, with $105000 as the upper band and $90000 as the lower band. We can see increased writing at these levels.
All these levels have been marked on the chart which are perfectly aligning with our price action study.
Intelligent traders would be playing around these two ranges formed by the bitcoin. Further move will only be decided when price breaks on either side.
Relative Strength Index (RSI)
Relative Strength Index(RSI) is showing a hidden bullish divergence, meaning although the momentum is slowing down, price is still holding up forming higher lows. This helps in cooling off of RSI index before the next leg up.
Volume & Institutional Activity
As expected, volume has dropped after a strong up move. Keep an eye out for the next volume spike with price breaking either side to find the next direction.
Final Thoughts
- Above Bitcoin analysis indicates Bitcoin on a buy on dip mode and shorts should be avoided above $90,000.
- While Bitcoin is consolidating, selling puts beyond $90k and calls beyond $110k is the best strategy till it breaks out on either side.
- It is important to note that one must use the mentioned levels to manage risk rather than predicting the next move.