Bitcoin (BTC) hit new two-month highs overnight on January 19 as suspicions about the validity of the market gained momentum.
Concern over BTC liquidity “exploitation”
Data from Cointelegraph Markets Pro and TradingView It followed BTC/USD as it consolidated above $21,000 after hitting $21,455 on Bitstamp.
That marked the pair’s highest point yet in 2023, the latest achievement in an indisputable bullish rally since the FTX debacle.
However, amid widespread mistrust in the move, fresh warnings have emerged as Bitcoin continues to defy predictions of a major reversal.
Analyzing the composition of the order book for BTC/USD on the largest Binance exchange, Material Indicators expressed surprise that those who bid Bitcoin higher had yet to gain support.
“I was waiting for the block of offers made on Friday the 13th to come through, but it attracted more than double the amount of liquidity of the offer in the range, which is bullish in the short term,” he said. commented.
“In my opinion, this movement seems choreographed. Not to combat it, but to limit exposure to manage the risk.”
As Cointelegraph reported, whales were already in the spotlight after a massive buying took place last week.
“They are trying to attract more offers to exploit the low bullish liquidity,” added Material Indicators.
“We could debate 100 different strategic reasons, but the net effect of large increases in bid liquidity is the same, at least until we retest local lows and they start to build support.”
Fellow trader Byzantine General noted a similarly unusual order book composition on derivatives platform Deribit, with support staggering between $20,000 and $21,000.
“Deribit’s book seems interesting. It’s not usually that skewed to one side.” argument.
Bitcoin supply may struggle to find a buyer
Meanwhile, doubts about the rally’s staying power extended beyond trading.
Related: Bitcoin Price Breakout or Bull Trap? 5K Twitter users give their opinion
in a blog post Posted to analytics platform CryptoQuant on Jan. 16, contributor Phi Deltalytics noted possible insufficient demand.
The reason, he said, was due to BTC returning to exchanges for sale while stablecoin supplies dwindled.
“The recent rally in BTC has prompted market participants to deposit their BTC from cold storage to spot exchanges for profit,” the comment noted.
“Such an increase in selling pressure coupled with the dwindling stablecoin pool to buy will likely lead to a short-lived recovery rally. More demand is needed for the rally to be sustainable.”
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