Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- The price action at last week’s lows showed that buyer confidence was waning.
- Bitcoin could be poised for a downward move, especially if stock markets take a hit on Wednesday.
Bitcoin [BTC] saw a series established over the past month. There was hope for a bullish breakout on July 13 as prices hit the $31.8k mark, but the bulls were quickly rebuffed. The past week showed that buyers are losing strength.
Read Bitcoin [BTC] Price Forecast 2023-24
The next Federal Open Market Committee [FOMC] meeting on 25 and 26 July. Expectations are mixed. Analysts on one side argue that July will see another 25-point rate hike after June’s “hawkish pause” to fight inflation. If this turns out to be true on July 26, it will see losses in the stock market. This would likely hurt the BTC market.
The plunge below the lows followed a week-long skirmish at $30,000
Source: BTC/USDT on TradingView
The bulls and bears have been battling for the past week to seize control of the $30,000 mark. The series formation takes only a month. The bulls’ inability to force a rally back to the range highs for as long as a week has meant that seller confidence has risen steadily.
This was reflected in the CMF, which failed to climb above +0.05. Instead, it had to fall below -0.05 again due to significant capital outflow from the market. The RSI has also been below the neutral 50 on the 1-day chart since July 15 following the rejection at the range highs.
With the bears in a dominant position, a retest of the $29.8k – $30k area can be used to enter short positions. It was possible but unlikely that the recent drop below the lowest values in the range was an anomaly. The amount of time BTC spent near $29.8k indicated bearish strength rather than whales seeking liquidity.
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The Open Interest chart has shown strong bearish sentiment over the past few hours, but is that changing yet?
Source: Coin analysis
Within the 12 hours leading up to the time of writing, Bitcoin prices started falling again below $29.9k. This was accompanied by an increase in Open Interest from $9.55 billion to $9.81 billion. The recent drop to $29k and the jump to $29.3k sent speculators from bearish to bullish.
This reinforced the idea that traders can wait for prices to rise before going short on BTC. The rise in OI on the most recent candle suggested short-term bullish enthusiasm, which was probably misplaced. The 4hr and daily charts support a bearish outlook and the next support levels for Bitcoin are $28.5k and $27.3k.