BitcoinBTC) trades in a tight $65,000–$70,000 range on Wednesday, a structure that has held for the past two weeks.
Futures data show that fresh long positions were opened as early as $66,000.
Analysts believe that the consolidation may be a precursor to a break-out attempt. The zones below $66,000 or above $71,000 may determine the direction of the move.
Bitcoin’s bullish reversal is near a key support level
Bitcoin has formed a channel on the hourly chart that is similar to the structure last week, which preceded an upward move towards $70,000. A clear divergence of the relative strength indicator (RSI), within this channel has emerged.
When the price prints lower or equal lows, but the RSI prints high lows, this is a bullish divergence. The sequence indicates that the selling pressure on the short timeframe is waning.
The price may rally to the $71,500 level for external liquidity and support if the $68,000 break is sustained.
Internal liquidity near $65,000 is the invalidation level. Breaking below this region invalidates divergence and shifts attention to the higher timeframe support between $62,000 and $60,000
Data from derivatives shows that aggregated interest in the two previous days has increased by 3%, to $15.50 Billion. This is despite the fact the prices have been falling.
The aggregated financing rate is now at 0.046%. Futures traders have been increasing their exposure to long positions.
In the last two weeks, approximately $250 million has been liquidated in long positions. This forced leveraged trades to be closed below $67,000. This long-side selling reduces excess leverage which can stabilize prices and improve conditions for an upward trend once traders return to the market.
Related: Bitcoin’s tech stock divergence is a ‘fire alarm’ for fiat: Arthur Hayes
Futures positioning and momentum
Amr Taha is a crypto analyst noted Binance Bitcoin futures have experienced a dramatic drop, resulting in a 30-day power change that tracks net changes in funding and open interest. The index dropped from 0.18 to the lowest levels seen in April-May 2024.
Taha believes that BTC may be at a pivotal point. Similar deep negative readings from April to May 2024 led a powerful rebound which propelled Bitcoin over $100,000 once the index became positive during the second half of 2024.
Crypto analyst Dom said Spot order books indicate a thin liquidity between $66,000-$69,000. The current activity is neutral. BTC’s price has been compressing in anticipation of an attempt to break out.
Heatmaps of liquidity shared BTC trader Daan shows dense clusters of liquidity below $66,000 to above $71,000. This indicates areas where resting and stop orders are most likely concentrated.
Related: Bitcoin 2024 buyers steady BTC price as trader sees $52K ‘next week or so’
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Source: cointelegraph.com
