Bitcoin (BTC) price could fall to $100,000 as multiple indicators signal a reversal

Bitcoin price bill surged on May 21, hitting a new all-time high of $111,903 on Coinbase. This price movement triggered $607.1 million in spot ETF inflows

Bitcoin price bill surged again on May 21, hitting a new all-time high of $111,903 on Coinbase. This price move triggered $607.1 million in spot ETF outflows, showcasing strong buying interest.

However, multiple indicators now signal that the Bitcoin price could fall to $100,000 in the short term.

Bitcoin Price Gains Meet Weak Volatility

The 30-day Bitcoin Implied Volatility Index sits at a 10-month low of 49.73. This divergence from the strong bitcoin price bill gains is interesting.

Usually, volatility tends to rise during periods of strong trends. However, this flatlining segment implies that options market participants lack conviction in the sustainability of the recent upward move.

Typically, when prices move up or down sharply, traders use options to hedge against potential losses or express extreme bullishness/bearishness through leveraged payoffs.

These directional bets would usually be reflected in higher implied volatility. But with this metric remaining low, it suggests that traders aren’t making large-scale bullish or bearish bets.

This lack of conviction could render the market more susceptible to swift changes in direction.

If traders aren’t massively bullish or bearish, it may explain why bitcoin price bills are struggling to break out further despite touching new highs.

But with traders engaging in more neutral to light directional plays, it could also explain why pullbacks are quickly met by buyers or sellers.

Bitcoin price bill gains aren’t being met with optimism from options traders, who aren’t pricing in further significant movement.

This divergence usually occurs at market tops or bottoms, signaling a potential short-term apex.

A reversal could follow if momentum weakens further amid meager derivative interest.

Bitcoin Price Rally Lacks Institutional Backing

Open Interest on CME for Bitcoin price bill remains weak and below early 2025 levels, revealing weak institutional engagement.

Even with all-time highs, futures activity hasn’t picked up significantly. This lackluster interest from large market participants is evident.

Usually, during bull markets or periods of strong price momentum, institutions increase their activity.

But this lack of engagement at these price levels indicates that these players aren’t massively bullish and prefer to observe further developments.

The CME annualized basis, comparing futures and spot prices, remains low at around 10%. This signals a narrow premium for holding long positions. It confirms that futures traders expect limited upside in the short term.

Typically, a higher basis indicates strong demand for immediate access to the asset, leading to a willingness to pay a premium for futures contracts.

But the low basis suggests that institutions aren’t in a hurry to accumulate bitcoin price bill at these levels.

This lack of urgency from futures traders supports the case for a potential pullback.

This condition could drive a correction back to $100,000 as large players remain on the sidelines.

On-Chain Metrics and MVRV Ratio Point to Profit-Taking Risks

Blockchain data reveals a concerning trend: a notable decline in daily active addresses and new wallets interacting with the Bitcoin network.

Despite this, the price of BTC has continued to climb higher, signaling a bearish divergence. This signals that market participation and price are not growing.

A lack of new entrants and fewer active users implies weakening demand, even as prices touch record levels. This divergence usually foreshadows corrections, especially in overheated markets. This divergence highlights the fragility of the current rally.

Moreover, the MVRV ratio shows that recent buyers have over 10% unrealized profits.

Historically, bitcoin price bills reverse when this metric crosses the 10% to 15% range.

This profit-taking pressure could trigger a fall to $100,000.

This analysis provides valuable insights into the potential trajectory of bitcoin price bills in the short term. As the apex approaches, institutions might step in to capitalize on the downturn.