Bitcoin (BTC) Teeters at $112,000: Will This Key Support Level Hold?

What was generally an up-day for Bitcoin on Wednesday only took the alpha cryptocurrency 2% higher. Thursday has dawned and the $BTC price has lost yesterday’s gains and is teetering at the edge of losing the very important $112,000 horizontal support level. Could the price drop again, or will this large structural support provide a turning point?

One of the largest weekly options expiries ever

If Bitcoin does lose the $112,000 horizontal support during the day on Thursday, a chasm could open up below. With this in mind, Friday has the potential to be a huge day. One of the largest weekly option expiries in the history of crypto will take place. It is estimated that between $18 billion to $23 billion in Bitcoin and Ethereum contracts will expire.

This upcoming expiry is likely to be 4 times the size of last week’s ‘triple witching’ event. Therefore, volatility spikes both up and down could serve to liquidate any traders courageous, or foolhardy enough to be making trades on such a day.

The $BTC max-pain point is at $112,000 down to $107,000, where most options would expire worthless, thereby maximising the pain for holders. Look for $BTC to potentially make a local bottom during this period of uncertainty.

Bulls and bears battle over key support level

Source: TradingView

Zooming into the short-term 4-hour chart once can observe the battle that is taking place between the bulls and the bears over the $112,000 horizontal support level. Numerous attempts have been made in this time frame to drop this level, but up to now it is continuing to hold. That said, at the time of writing, a new candle has just opened below. If this doesn’t get bought back up above the support level, this could be the first crack opening in the dam.

The Stochastic RSI indicators are on their way down. This could add downside momentum if the price does fall from here. The RSI, right at the bottom of the chart, saw its indicator reject from the descending trendline. The omens on this short time frame do not look good.

Price takes hold below 50 and 100-day SMAs

Source: TradingView

The daily time frame shows that support is still holding. It also reveals though that the $BTC price has caught hold below the 100-day simple moving average (SMA), and also, the 50-day SMA is moving down to potentially cross below the 100-day SMA. If this occurs, this could be yet another nail in the coffin of more downside.

At the bottom of the chart, the daily Stochastic RSI indicators are nearly at the bottom of their range. A further drop, perhaps all the way back down to the $108,000 support level, would take them right to the bottom, and ready for a cross back up. This cross-up could even happen soon, depending on whether a bounce can develop from here.

8-year ascending trendline - breakout or rejection?

Source: TradingView

The weekly chart illustrates a multi-year trendline that began at the top of the 2017 bull market. Over the period of its 8-year existence so far, it has marked the double top of the 2021 bull market, and more recently the highs of this current bull market. The price did break through the trendline for the first time when the $124,000 all-time high was set in a period between July and August. 

Since that time, the $BTC price has been rejected down to the $108,000 horizontal support level, before retesting the trendline and coming back down to the $112,000 horizontal support.

Will the Stochastic RSI indicators now start rising, signalling the onset of much-needed upside price momentum, or will bearish divergence on the RSI start playing out, possibly leading to the end of this current bull cycle?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.