Recently, Bitcoin tried to sustain its value above the key $38K resistance mark but encountered growing selling pressure, leading to a rise in short positions around that level. Consequently, the price of Bitcoin experienced a sharp drop, approaching a low of $37K. However, it now appears to be gearing up for a comeback, as it sets its sights on a short-term trap within $37,700, as noted by a well-known analyst.
Bitcoin’s Liquidation Touches $20 Million
In the past 24 hours, Bitcoin has seen significant fluctuations, declining from a peak of $38.5K down to $37K, leading to an increase in total liquidations. According to information from Coinglass, the BTC price experienced total liquidations close to $20 million, with long positions accounting for about $13 million of this amount. This development has notably dampened the hype of buyers, as the BTC price lost the progress it had made during its surge towards $38K.
According to an analyst, Bitcoin has swept its low-time frame (LTF) low, showing a positive reaction so far. The analysis suggests a possible “trap setup” with a target range of $37.5K to $37.7K. Importantly, Bitcoin maintains a clean uptrend as long as the trendline and structure remain unbroken.
The analyst observes a reduction in open interest, indicating that shorts have been hunted, and on lower time frames, shorts are still favored. There’s a noticeable perpetual discount versus the spot price, which becomes actionable when the spot is bid.
The analysis highlights that spot takers led the bounce, with perpetual takers becoming the forced bid, primarily due to shorts being forced out of the market. As the European and US sessions commence, it will be crucial to see if spot bids continue. On Binance Spot, there’s significant bid liquidity below $37K, suggesting that continued net selling by spot takers could fill those limit bids below.
BTC Brings Dip Buying Opportunities
According to the chart, clear resistance levels are currently set between $38K and $40K. On the flip side, demand is likely to be strong in the $35K to $31K range, presenting a dip buying opportunity, especially with closes above $30K.
Bitcoin might soon trap sellers as it holds the 4-hour 50-day EMA. The price is still respecting the trend, but there’s a noticeable loss of momentum from buyers, as indicated by the rejection of the 4H 21 Exponential Moving Average (EMA) and the Relative Strength Index (RSI) at 50.
For the bullish trend to continue, Skew advises that bulls need to reclaim $37.5K and the 4H 21EMA or demonstrate strength around $36.7K for the next higher low confirmation and respect of the trendline.
The weekly open for Bitcoin stands at $37,447. However, the analyst points out that the strength isn’t particularly robust, with the only clear sign being the purchasing of dips. The weekly balance ranges from $38,414 to $35,632, with a breakout beyond these points likely to bring volatility.
Should Bitcoin struggle to surpass the $38,000 resistance area, it might initiate a new downward trend. The initial support level lies around $37,150. A significant support level to watch is $36,700. A descent below this mark could lead to further declines. Under such circumstances, the price might fall towards the $36,000 support level in the short term. Subsequently, the next critical support or potential target is at $35,650.
Interestingly, traders are showing an increased bullish sentiment following Bitcoin’s recent rebound, which has boosted buying interest. The long/short ratio is now trading above 1, indicating that 52% of positions are betting on a price increase. Nevertheless, bearish positions remain strong, taking 48% of the positions, suggesting a potential for bears to take control.
