Bitcoin (BTC), which has dropped below $61,000, is now trading in a zone of dense liquidity on the buy side. A key demand area was created by more than $525 in bids that were initially placed between $60,500 to $61,500. Liquidation risks are increasing on both sides.
BTC orderbook data shows that liquidity is concentrated below $65,500 and close to $65,000. This puts liquidity at the heart of Bitcoin’s price movement in short term.
Bitcoin momentum weakens below $63,000
Bitcoin reached its lowest closing price for a daily candle since 10th June. This move produced an engulfing bearish candle compared to Monday’s range. It erased the previous day’s gains, and indicated a weaker short term momentum.
BTC/USDT, one-day chart. Source: Cointelegraph/TradingView
Since then, after the loss of that support level, prices have consolidated below $63,000. Following the recent rejection at $66,000, you can see a series lower highs on the one-hour chart. The relative strength index, also known as the momentum indicator (RSI), is now cooling from its recent overbought level, and Bitcoin remains above the low of June’s range near $60,000.
BTC/USD, one-hour chart. Source: Cointelegraph/TradingView
Lennaert Snyder, a crypto trader called for BTC is expected to first test its lower liquidity level before considering a long-term investment. A trader stated,
“Bitcoin started a little bounce, but I’m not convinced and not buying in yet,” Snyder wrote this in a market update.
He said that $61,500 to $60,500 were the two primary levels for watching bullish reactions. He pointed out that $63,500 or $64,000 could be areas of liquidity where price can move before another lower movement.
Buy bids for BTC of $530 Million are below the $61,000 mark
Velo data shows BTC traders added 8 366 BTC initially to offer liquidity between $60,500 and $61,500. Bitcoin was trading at a substantial portion of the range when this article was written, and triggered approximately $270 million in buy orders.
Traders try to absorb this latest selling pressure by keeping the remaining bids near the lower part of the cluster of liquidity.
BTC bids and buy bids. Source: Velo Chart
A significant amount of leveraged positions that were clustered at $61,500 have already been flushed out by the move below. CoinGlass shows that more than $125,000,000 in liquidations of long positions have occurred over the last hour. This has reduced the downside pressure at the current price.
After clearing out much of the leverage on the long side, liquidation maps now show a growing imbalance towards short positions above the current spot price.
The short position totals now exceed $1.2billion and are near $63,500. As the bid liquid around $60,500 to $61,000 stabilizes, it may be time for people to pay more attention.
Bitcoin liquidation map. Source: CoinGlass
Near $65,000 is the next concentration of risk, with more than $2 billion in short positions at risk. These setups can often lead to rapid moves, as the liquidations drive additional purchases. At the moment, liquidity is concentrated near $60,500. Both spot demand and leveraged positions are heavily loaded.
Related: BTC price four-year trend calls for $76K as analysis says Bitcoin ‘not broken’
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Source: cointelegraph.com
