Bitcoin Capped at $116K, as Traders Reduce Risk Before FOMC Deal and China Deal

Important points 

• Bitcoin’s ability to break through the $116,000 price barrier could depend on both Wednesday’s Fed interest rate decision and this week’s US-China Trade Summit. 

• The pro-traders are investing in BTC rallies and retail investors are purchasing the dips on spot. They are also liquidating in futures. 

BitcoinBTCPrice continues to rise, up 13% in just a few weeks since the historic sell-off that was triggered by liquidation on 10th October. But technical charts suggest that daily closes of $116,000 or more are required to confirm a bullish trend. 

TRDR data shows that sellers have capped intraday price breakouts over $116,000 and the order books at Binance, Coinbase and other exchanges show a wall of requests at $116,000 for Coinbase Spot and between $117,000 and $118,000 for Binance Perps. 

The order book graph on the left shows that futures traders lowered their bids from $115,000 up to $116,000, as they increased the risk of a rally against the resistance. Short liquidations also topped $49,83 million over the last 12 hours.

While BTC bulls continue to struggle, there are a few positives that can be seen in the data. Open interest on global exchanges has recovered from a low of just $28.11billion in October to $31.48billion. But it’s still lagging behind the $40.39billion seen at $124600. 

The spot Bitcoin ETF is also seeing an increase in inflows, as the net inflows over the last few trading sessions have been $260.23 Million. A notable inflow of $477,000,000 was on Oct. 21st, just days after BTC’s price dropped below $108,000. 

Hyblock data shows that investors with larger orders (1,000,000 to 10,000,000) continue to buy the dips, while retail investors (with smaller order sizes of 1,000 to 10,000), have continued to purchase the rips.

Hyblock’s aggregate orderbook bid/ask (set at 10% depth) currently shows a heavy ask orderbook. The true retail longs/shorts account metric, however, shows Binance’s short positions increasing.

Some investors may be looking to reduce their risk exposure in intraday trading ahead of the FOMC meeting on Wednesday, when the US Federal Reserve announces its interest rate decision.

The Fed’s benchmark interest rate is likely to be cut by 25 basis point, but traders have been adjusting their positions in anticipation of this announcement. 

Related: Bitcoin price taps $116K as analysis weighs odds of CME gap fill

Some traders may be anticipating that perps will risk off, resulting in a drop in liquidity for long positions, or, conversely the rise in shorts as a way to liquidate on the downside.

This can be observed in the graph below where an entire cluster of leveraged shorts, valued between $112,000 and $113,000, is being liquidated.

The meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday is a major risk. The market could feel the negative effects of a trade agreement that is perceived as not being favorable for the US or global markets if talks fail.

Bitcoin is expected to remain in a range between $116,000, the resistance level and $110,000 as support.

The article is not intended to provide investment advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.