bitcoin price returned to its sideways price trend after a powerful rise towards new yearly highs. The cryptocurrency appears poised for further gains if the bulls can hold a critical level.
At the time of writing, btc is trading at $36,370, with a loss of 2% in the last 24 hours. Over the past week, the number one cryptocurrency by market cap posted a 5% gain, while sentiment in the sector appears mixed, with btc posting losses while ethereum and Solana remained strong in the same period.
bitcoin Likely to Rebound if This Scenario Plays Out
According to a pseudonymous analyst, liquidity in the bitcoin spot market, as measured by a “liquidity map,” has been assigned downward. This metric measures the amount of leverage on the btc/USDT trading pair.
The chart below shows that btc is trading near a huge liquidation pool. Overleveraged positions create these levels and are often leveraged by large players to exploit liquidity.
btc whales chase liquidity, moving prices towards the largest pools of overleveraged positions. If the $36,300 is taken advantage of, the next level of interest is between $36,961 and $37,700. the analyst fixed:
Large groups at $36,000 and ~$37,000. You would expect quite a few positions to build up around that 37K region, mainly because we trimmed it all day yesterday. The bears are back in control on the LTF (Low Timeframe) below $36,300, I would say.
On the other hand, bitcoin price could trend sideways between $36,300 and the high of its current range. Additional data from crypto analysis firm Bitfinex Alpha indicates that historical data hints at bad news for optimistic traders.
The firm recommends caution to traders as the liquidity gap in the bitcoin spot market widens. According to recent data, the price realized by short-term holders of btc (STH RP) bought the cryptocurrency at an average price of $30,380, which could incentivize these investors to take profits at current levels.
This is the first time that STH has had the opportunity to make big profits on its btc holdings since April 2022 and December 2022. Historically, a monthly change in STH’s RP exceeding $2000 often indicates local spikes, particularly after the recovery in bear markets, as seen in the chart below.
At the same time, a negative monthly change in LTH RP usually implies that long-term holders are dumping their bitcoin. The convergence of a $2,000 increase in monthly STH RP and a decrease in LTH RP suggests a high probability of a local spike in bitcoin price.
