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Bitcoin May Soon Push Higher After Taking Out Key Liquidity Levels

Published

4 Monaten ago

on



  • Bitcoin has witnessed some slight instability throughout the past few hours, with sellers rejecting BTC above its key resistance level at $10,500
  • The decline from its highs shows that this price remains a strong region of selling pressure
  • The likelihood of BTC seeing further downside in the near-term is now significantly higher than what it was previously
  • Some analysts are noting that where it trends next will depend largely on its reaction to a few key liquidity levels that he is closely watching

Bitcoin faced a slight rejection above $10,500 overnight, with bulls being unable to maintain the strong momentum that they had built throughout the past several weeks and months.

This has contributed to the cryptocurrency’s technical weakness and may indicate that some downside is imminent in the near-term.

It is important to note that BTC has yet to break below its support at $10,200, which has been defended by buyers on multiple occasions throughout the past several days and weeks.

While speaking about this latest move, one analyst explained that the benchmark crypto is now approaching a few key liquidity levels. How it reacts to these levels should offer insight into its near-term outlook.

Bitcoin Erases Yesterday’s Gains as Buyers Lose Their Momentum 

At the time of writing, Bitcoin is trading down just under 2% at its current price of $10,300.

This is around the price at which it has been trading throughout the past few days and weeks, with buyers being unable to garner any strong momentum as sellers continue defending $10,500.

For a brief moment overnight, the cryptocurrency surged as high as $10,560 before plunging towards $10,280. This is around the price at which it found some strong support that slowed its descent.

Analyst: BTC Likely to Continue Plunging Until It Takes Out Key Liquidity Targets

While speaking about the cryptocurrency’s near-term outlook, one analyst explained that he is watching for Bitcoin to reel towards $10,100 as it takes out some downside liquidity.

He does state that he expects the benchmark crypto to continue climbing higher once it takes out these key levels.

“As usual, liquidity levels is where it’s at. Liqs get taken, price dumps. We just took some liqs again. I can see this going back up from here, otherwise it maybe dumps a bit further to 10100,” he explained.

Image Courtesy of Byzantine General. Chart via TradingView.

How the aggregated market trends in the coming few hours should provide insight into the significance of this recent Bitcoin rejection.

Featured image from Unsplash.
Charts from TradingView.





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Bitcoin

‘Bullish year ahead’ — Bitcoin primed for Q1 2021 gains, strength index suggests

Published

18 Minuten ago

on

Dezember 29, 2020

By


The monthly relative strength index (RSI) of Bitcoin (BTC) shows the dominant cryptocurrency is primed for another rally.

Is 2021 an ideal time for a Bitcoin rally?

The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI surpasses 75, it signals the asset is overbought, and when it drops below 30, it means the asset is oversold.

A pseudonymous trader known as “Crypto Capo” noted that the monthly RSI of Bitcoin is set to close above 80. Historically, when this has happened, BTC has saw a strong rally afterward.

Although the monthly RSI of Bitcoin is above 80, which is technically oversold, BTC’s RSI tends to become oversold for prolonged periods during a bull cycle.

The monthly RSI of Bitcoin. Source: Crypto Capo

Hence, traders often refer to an oversold RSI on a high time frame chart, like the monthly candle chart, to forecast an extended rally in the short term to medium term. The trader said:

“Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”

However, the trader emphasized that one indicator cannot accurately predict the price cycle of Bitcoin. Crypto Capo explained that the combination of a few indicators could serve as guidance for the future. He wrote:

“You cannot base a prediction on an indicator. What we do is combining several methods to have a guideline for the future, to see what is more likely. But in the end, we adapt to what the price does in the present.”

“Bullish year ahead”

Traders have differing perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly bullish.

Cointelegraph Markets analyst Michael van de Poppe said he anticipates Bitcoin to reach $65,000 to $85,000 by next year’s end. He stated:

“I’ve got to revise my view on the potential level of $BTC at the end of 2021. Through this recent surge, I’m expecting it to be between $65,000-85,000 at the end of 2021. Bullish year ahead.”

Meanwhile, the options market is pricing in a 22% chance of Bitcoin achieving $120,000 by next year, which could also serve as a potential guideline on where BTC is heading in 2021.

In the short-term, however, some traders are cautious in entering leveraged positions. A pseudonymous trader known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $25,000 or enter after the next price upsurge. The trader explained:

“No rush to enter leveraged trades on $btc right here imo. Best would be to wait and long low 25k or even mid 24k. Alternatively, wait for the next leg up and then a dip from there.”

Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which could buoy the mid-term bull case for BTC entering into 2021.