Bitcoin Price Supported By Thin $40 Million Bid Pool, But For How Long?
August 14 2023 - 6:00PM
NEWSBTC
In the ongoing market turbulence on higher timeframes, Bitcoin
(BTC) is at a crucial juncture as a great consolidation phase
persists. Research and analysis firm Material Indicators closely
monitored the recent weekly candle close/open, paying particular
attention to two key factors: the trend line and the 21-day,
21-week, and 21-month moving averages (MA) – all of which are
currently influential in shaping market dynamics. Uncertainty
And Potential Turning Point For Bitcoin The opening of the weekly
candle below the trend line triggered a “subsequent nosedive,”
amplifying concerns. While the 21-week and 21-month moving averages
continue to serve as robust support, the 21-day MA has faced a
rigorous seven-day testing period, according to the firm’s
analysis. Notably, the tight correlation of the 21-MA across
three distinct time frames is rare, indicating that the market is
at a critical inflection point. Despite the compressed
volatility witnessed in recent days, the price action observed over
the past 24 hours exemplifies the market’s attempt to shake out
weak hands. According to Material Indicators, given the complexity
of the current price action, it is prudent to zoom out and gain a
broader perspective. Both Trend Precognition algorithms identified
these moves on the four-hour chart, emphasizing the significance of
adopting a comprehensive outlook. Moreover, according to Materials,
the order book reveals a concerning trend in bid liquidity, with
less than $40 million holding the price up. The absence of
substantial liquidity below this level raises fundamental worries.
However, it also suggests that there may not be sufficient
sentiment to drive prices significantly lower – at least not
yet. Related Reading: XRP Volume Jolt: How Did The $3 Billion
Surge Impact Price Action? In addition, Material Indicators
highlights that the examination of liquidity movements within the
order book over the past month paints a picture of continued price
volatility with a potential upward bias. However, the lack of
volume raises concerns about the market’s overall health. Despite a
$13 million buy wall at $27,900, the bottom of the channel at
$28,300 remains a critical threshold for BTC to extend its current
trend. The firm claims: … the bottom of the channel at $28.3k
remains my line in the sand for BTC to extend the trend, and I
maintain that we must see weekly candles printing above the
100-Week MA to even consider a bull breakout. BCT Faces Renewed
Pressure Amid Strengthening US Dollar As Bitcoin enters a new week
of trading, market participants closely monitor the potential
impact of the strengthening US Dollar Index ($DXY) on the world’s
leading cryptocurrency. According to Yan Alleman, co-founder
of blockchain analytics firm Glassnode, recent developments suggest
that BTC may face renewed pressure due to the upward momentum of
the $DXY. Alleman highlights that the $DXY’s renewed strength could
exert downward pressure on Bitcoin’s price. Historically, there has
been an inverse correlation between the value of the US Dollar and
the price of BTC, meaning that when the dollar strengthens, Bitcoin
often faces headwinds. However, options pricing indicates a
bullish sentiment for Bitcoin in the coming month. Options are
financial derivatives that allow traders to speculate on the future
price of an underlying asset, in this case, Bitcoin. The
pricing of options contracts suggests an expectation of a bullish
move shortly. This aligns with the technical analysis indicating
potential upside for Bitcoin. Related Reading: Base TVL Surges 900%
In 2 Weeks, What’s Driving The Growth? Analyzing the potential
price movements, Alleman notes that it would require nearly twice
as much selling pressure to push Bitcoin down to the low $28,000
range compared to the buying pressure needed to surpass the $30,000
level. This observation suggests that there may be greater
support and buying interest at higher price levels, making a
sustained drop less likely. As of the time of writing, Bitcoin
(BTC) is trading at $29,500, reflecting a marginal 0.4% increase
over the past 24 hours. Featured image from iStock, chart from
TradingView.com
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