Bitcoin is bouncing back north of critical resistance around $20,000 after a rejection and may be preparing for a fresh leg down to its final support level. The crypto saw some gains earlier this week, but any bullish momentum was quashed by macroeconomic forces.
At the time of writing, Bitcoin (BTC) is trading at $19,600, down 2% over the past 24 hours and trading sideways for the week. The rest of the crypto market follows crypto market sentiment, proving that any potential rally is once again limited by the bigger picture.
BTC price crashes on low timeframes. Source: BTCUSDT trade view
Bitcoin Takes Out Leverage Longs, Time for a Squeeze?
According to analyst Justin Bennett, Bitcoin made a downward run towards $19,600 and slightly lower to remove leverage players from their positions. Cryptocurrency often moves in the opposite direction of the majority of traders, racing towards the pools of liquidity created by excessive leverage.
In this case, retailers may have entered this week’s bullish price action by going long in hopes of further appreciation. Bennett believes the market could be preparing for a rebound with these players:
BTC long liquidations total $19,600 as mentioned in Discord yesterday. Now it’s probably time for a bounce back to $20,500. Trade only both sides of the range for now.
In general, Bennett has been bullish on Bitcoin and will maintain that bias as long as BTC’s price stays above $18,700. This price is the bottom of a potential channel created by the cryptocurrency over the past few months.
Recent price action suggests a prolonged recovery rally into the $26,000 area. In the short term, when leverage longs are out of play, it might be time to squeeze out the shorts. The analyst added:
I still think it’s only a matter of time before short-term liquidations run between $20,450 and $20,800. Now only play on the range.
Macro forces push the crypto market lower
What Caused Bitcoin to Plunge From Its Weekly High? A pseudonymous trader believes it was the latest data on jobs in the US economy. This report could support the US Federal Reserve to continue raising interest rates in order to lower inflation and thereby lower risky assets.
As reported by NewsBTC, the Fed’s monetary policy has been costly to stocks and the crypto market, which moves alongside these assets. Now the job numbers tell the financial institution it can continue to put pressure on the markets.
However, this trader believes that the recent price action has switched back to sideways mode and that Bitcoin could avoid any catastrophic downward price action for now. Via Twitter, this retailer said:
This puts us back in the middle of the 18.5-20.5K perpetual range and therefore quite a long way from any breakout, be it up or down. Barring anything notable, I’d say we’re likely to stay in this range at least until next Wednesday’s CPI read.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.