Crypto Set Up For Squeeze, Will BTC Price Get In The Way?
Bitcoin is showing weakness as BTC prices are trading in a tight range. The number one crypto by market cap saw a slight increase in volatility during today’s trading session. However, the price development was stifled by poor results in traditional shares.
At the time of writing, the BTC price is trading at $19.00 with a loss of 4% in the last 24 hours and a loss of 3% in the last week. As Bitcoin trends lower to support, the momentum indicator follows suit, suggesting little conviction to resume bullish momentum.
BTC price liquidity trends to the downside as Bitcoin sheds $19,000 levels
In the next two weeks, the crypto market will go through a major milestone with Ethereum’s “Merge”. The second crypto by market cap will complete the transition to a Proof-of-Stake (PoS) consensus. As a result, the ETH price has outperformed the BTC price.
“The Merge” is scheduled for mainnet distribution between September 13thth until the 15thth, this event is bound to bring volatility into the market. Today, Ethereum core developers announced the successful implementation of the “Bellatrix” update.
A few hours later, BTC price broke below a critical support zone and trendline created since the bullish price action in August. Data from Material Indicators shows that liquidity in the order book of crypto exchange Binance has thickened to the downside.
As the price of Bitcoin trends lower, liquidity has followed and is near the cryptocurrency’s annual low between $17,600 to $18,000. Meanwhile, all classes of investors have sold into the price action, from retail to large investors.
If today is any indicator of what traders can expect from “The Merge,” and bulls can support the BTC price’s current levels, the cryptocurrency could take another leg down the pool of bids shown in the chart above. The next critical support levels are $17,000 and $16,000.
For a deeper dive into “The Merge” and its potential implications for the price of Ethereum, check out the analysis from our Editorial Director Tony Spilotro.
Institutions Go Short, BTC Price Doom To Retest Annual Lows?
The other major catalyst for the crypto market will take place during “The Merge”, the US will publish its latest Consumer Price Index (CPI) which will provide more clues to the country’s inflation. As NewsBTC has reported, the US Federal Reserve (Fed) has been aggressively trying to keep inflation in check by raising interest rates.
As a consequence of this, the risk markets have been lower. If on September 12th CPI print maintains July trend to the downside, Fed may hint at some easing of monetary policy. This could allow the BTC price and other cryptocurrencies to regain their bullish momentum.
In a recent report, trading desk QCP Capital noted a reduction of long positions (blue line in the chart below) by institutions as they increase their shorts (purple line below). This suggests what these entities expect in the short term. The Trading Board said:
The showdown between macroeconomic conditions and market positioning will come as soon as September and determine whether bearish macro forces play out as the market hopes, or whether we are setting ourselves up for a squeeze of historic proportions.
