Bitcoin has bounced back from its critical support zone at $ 31,200 at the time of writing and is trading at $ 31,835. The first cryptocurrency by market cap has seen a surge in selling pressure this week. Experts predict another surrender event, but they cannot agree on the timing and volatility.
BTC with small price gains in the daily chart. Source: BTCUSD Tradingview
Any move down or up could be built around a crab-like price move with long periods of consolidation.
Popular trader and analyst Byzantine General noticed the reversal in financing prices on the BitMex exchange and the increase in short positions. This is usually viewed as a sign of bottoming out as liquidity moves up, giving market makers an opportunity to push prices down to that level to push more games forward. The dealer said:
Cause and effect guys. Nothing ever bottomed out when the majority of retailers are long (or short). There is now some signs of short aggression but no spot bid to blow it out so shorting only adds more pressure. Not sure what’s next. Mebeh 30k, Futs backwardation, them omega squeeze.
As can be seen in the graphic below, the KingFisher monitor has recorded many pools of liquidity around $ 33,000 and $ 34,000 with indications of increasing volatility. Therefore, it can be assumed that big players have more incentives for Bitcoin to drive liquidity around these levels.
Source: The KingFisher
Additional data provided with CryptoQuant indicates that over 14,550 BTC has penetrated exchange platforms. As can be seen below, this spike in foreign exchange inflows has historically been followed by small rises and larger falls. A similar scenario could be at play.
Two potential scenarios for Bitcoin as the market is trending down
Pseudonym trader Daan Crypto believes Bitcoin is stuck in the low of the downtrend channel. The first cryptocurrency by market cap appears to be weak, Daan said, and could test new lows at $ 30,000.
Source: Daan Crypto (@Daancrypto)
In the event of a return to these levels at $ 30,000, the trader expects the price of BTC to follow two scenarios. First, the cryptocurrency could continue to break below its critical support zone and beyond its annual opening at around $ 29,000.
In this case, the trader expects Bitcoin to fall below the range between $ 23,000 and $ 26,000. This could be an ideal zone to go long.
Otherwise, if Bitcoin holds support near its annual opening, the previous scenario could become invalid and the cryptocurrency could hit the $ 30,000 level again. This could set the stage for a more convincing rebound from Bitcoin’s previous highs.
On the other hand, the pseudonym trader Rekt Capital believes that Bitcoin could form a triple bottom. The trader expects that a daily close above $ 31,500 could be a bullish signal with a target price of $ 38,900.
The triple bottom scenario for #BTC is still very much alive at the moment $ BTC #Crypto #Bitcoin pic.twitter.com/lW6xVa5WYh
– Rekt Capital (@rektcapital) July 16, 2021