Bitcoin Crashes To $19.6k Taking Liquidity, Ready To Bounce?
Bitcoin is bouncing back after a rejection north of critical resistance around $20,000 and could be preparing for another leg down to the final support level. The crypto had some gains earlier this week, but any bullish momentum has been wiped out by macroeconomic forces.
At the time of writing, Bitcoin (BTC) is trading at $19,600 with a loss of 2% in the last 24 hours and sideways movement throughout the week. The rest of the crypto market follows the crypto market sentiment, proving that again, any potential rally is limited by the bigger picture.
Bitcoin Takes Out Leverage Longs, Time for a Hug?
According to analyst Justin Bennett, Bitcoin moved down towards $19,600 and slightly lower to remove leverage players from their positions. The cryptocurrency often moves in the opposite direction of the majority of traders and makes a run for the liquidity pools created by over leveraged positions.
In this case, retail traders may have jumped into the bullish price action experienced this week by going long in hopes of further appreciation. Bennett mean that with these players out of the way, the market could be ready for a bounce:
BTC long liquidations cost $19,600, as mentioned yesterday in Discord. Now it’s probably time to go back to $20,500. Just switch both sides of the range for now.
In general, Bennett has been bullish on Bitcoin and will maintain this bias as long as BTC’s price remains above $18,700. This price is the bottom of a potential channel created by the cryptocurrency in recent months.
The recent price action has suggested a longer relief rally in the $26,000 area. In the short term, with leverage longs out of the game, it may be time to push out the shorts. The analyst added:
I still think it’s only a matter of time before we see short liquidations run between $20,450 and $20,800. Just playing range for now.
Macro forces the crypto market down
What caused Bitcoin to crash from its weekly high? A pseudonymous trader believes it was the latest data on job numbers in the US economy. This report could give the US central bank support to continue raising interest rates to reduce inflation, and risk to assets as a consequence.
As reported by NewsBTC, the Fed’s monetary policy has been costly for stocks and the crypto market that moves in tandem with these assets. Now the job figures tell the financial institution that it can continue to put pressure on the markets.
However, this trader believes that the recent price action has switched back to sideways mode and that Bitcoin can avoid any catastrophic downside price action, for now. Via Twitter, this trader so:
This puts us back in the middle of the eternal 18.5-20.5K range and because of this we are quite far away from any breakout, whether up or down. Unless something special happens, I’d say we’re likely to stay within this range roughly until at least the CPI number next Wednesday.
