After overcoming the initial uncertainty following the inauguration of the Trump administration, Bitcoin (BTC) has managed to hold its ground above the $100K threshold. Over the last two days, the dominant cryptocurrency has been fluctuating within the range of $100K to $105K.
With critical on-chain indicators hinting at a possible breakout from the current price range, what lies ahead for BTC in the immediate future?
Bitcoin’s Price Range Expansion
Recent price movements have been confined to the upper limits of the $90K-$108K range. Despite previous instances of bulls leveraging the 50-EMA (yellow) on the 4-hour chart for short-term re-entry, notable chart signals have indicated a growing bearish momentum.
For example, the Directional Movement Index (DMI) highlighted a considerable easing in short-term momentum (with the red line surpassing the green), potentially empowering short-sellers. Additionally, the 4-hour RSI slipped below 50 recently, signaling subdued demand, possibly influenced by post-inauguration caution.
This bearish sentiment raises concerns about the $100K support level and the mid-range. If breached, Bitcoin’s price could see a decline towards $96K or even the range-lows at $92K.
Crucial BTC Price Levels Based on Liquidity
Contrarily, the liquidation heatmap painted a different picture. Currently, there exists a significant liquidity concentration (depicted in bright yellow) at $109K. This suggests that many market participants are shorting the asset near its recent all-time high. This substantial liquidity pool may act as a price attractor, potentially propelling Bitcoin’s price upwards and defending the $100K mark once more.
In spite of this dynamic, optimism prevails in the Futures market, despite the cautious sentiment prevailing in the spot markets. QCP Capital, an Options trading desk, reported a higher volume of bullish positions compared to bearish ones in the Futures market.
“Furthermore, BTC futures are on an upward trend, particularly in the near term, with a strong net-long position from the previous week. Bullish positions currently outnumber bearish ones by a ratio of around 20:1.”
Referencing Deribit’s upcoming key Options expiry on January 31st, the highest Open Interest for calls (bullish positions) resided at $110K and $120K, signaling these levels as crucial bullish targets by month-end.
On the downside, Options traders anticipated key levels around $90K (highest puts, bearish bets) and the maximum pain point at $96K for potential sharp corrections.
To sum up, the market anticipates price fluctuations within the $90K-108K range, with a potential deviation towards $110K.
Disclaimer: The views presented are opinions and do not constitute financial, investment, trading, or any other form of advice.