Assessing Resistance Levels for Bitcoin and XRP Amid Price Rallies
As cryptocurrencies progress into price-discovery territory, the activity within the options market helps traders identify potential resistance points.
Key Highlights:
- Recent options market activity for Bitcoin (BTC) indicates a resistance point at $120,000.
- Notable engagement has also been observed with the $200,000 strike call option.
- For XRP, traders are focused on out-of-the-money calls at $2.8 and $5.
When assets reach new highs or multi-month peaks, traders need to identify pivotal resistance levels—targets where the market may consolidate.
Currently, Bitcoin is trading close to record highs around $100,000, entering uncharted territory. Meanwhile, XRP is priced at about $2.44, with its previous record high from 2018 around $3.30.
Identifying Resistance Levels
One effective way to pinpoint resistances is by analyzing open interest distribution, representing the dollar value of active options contracts at various strike prices.
On Deribit, the world’s premier crypto options exchange, the $120,000 strike call is currently the most popular contract with a notional open interest of $1.93 billion, per Deribit Metrics data.
High open interest at a strike price frequently signifies a resistance level, as call sellers, typically institutional traders, may incur substantial losses beyond this point. Hence, they generally work to restrain prices from exceeding such levels, while also acting as a magnet due to the hedging strategies of market makers.
Before and after the recent U.S. election, the $100,000 call was the favorite among traders, showing considerable open interest, and now the price has stabilized at this critical figure.
By the latest data, the call at the $100,000 level remains the second-most active contract, holding an open interest of $1.8 billion. This is closely followed by the $110,000 strike call, with $1.68 billion in open interest.
Analysts forecast that Bitcoin’s price could soon reach $200,000, as evidenced by the $500 million locked in for that strike.
XRP's Resistance Points
For XRP, the most popular strike is at $1, which has an active open interest over $3 million. The option is already significantly profitable as XRP trades near $2.42.
Special focus is directed towards the $2.8 call option, boasting $2 million in open interest, with the next target being the $5 mark—designating the third-most engaged option with an open interest of $1.12 million.
