- ‘Silk Road’ discussions could fuel a possible return to $69,000 and higher
- The liq levels indicated a bullish bias that could leave shorts in shambles
On April 4 Bitcoin [BTC] bounced back above $69,000 before falling to $67,500 hours later. According to AMBCrypto’s analysis, there were specific reasons for the recovery. One of the most important was the 10,000 BTCs that the US government sold.
When such sales occur, the expected response is a price drop. However, the opposite happened due to the broader market’s reaction to the development.
The bumpy path seems like a good option
For those unfamiliar, the BTC sold came from Silk Road, a marketplace that abused Bitcoin to facilitate the sale of illegal goods.
Based on our analysis, market participants showed fear, uncertainty and doubt (FUD) as more seized BTC could be sold later in the year. With the help of Santiment’s social tool we can noticed that the word “Silk Road” stood out among participants, indicating that they were afraid of the consequences for Bitcoin.
Source: Santiment
There were also conversations about the same issue in January, which led to an increase in social volume. At the time, the price of Bitcoin was rising.
Therefore, if public expectations continue to languish in FUD, the coin’s price could retest $69,000. However, when the dust settles, BTC could end up trading sideways unless a wave of buying pressure comes along that changes the tune.
Meanwhile, AMBCrypto also looked at liquidation levels. According to our analysis of the indicator, there is a liquidity cluster from $68,000 to $71,000, which suggests that Bitcoin’s price could rise to this level.
Pay attention to shorts! This is not your time
If this is the case, highly leveraged shorts could see their funds wiped out.
In addition, we also took the Cumulative Liquidation Levels Delta (CLLD) into account. The CLLD is the sum of the difference between long liquidations and short liquidations. If positive, the CLLD indicates that more long-term liquidations are taking place.
On the other hand, a negative reading of the CLLD indicates that long liquidations are more than short liquidations.
Source: Hyblock
However, the indicator does more than just identify short or long gaps as it also provides insight into price action. From the chart above, we can see that Bitcoin recorded a slight dip. As a result, shorts have tried to take advantage of the decline. On the contrary, the long liquidation levels were hit as the price slowly recovered.
This trend indicates a bullish bias for the coin. If care is not taken, shorts that insist on capitalizing on the move could potentially get liquidated.
Is your portfolio green? Check the Bitcoin Profit Calculator
In the future, the price of Bitcoin could rise towards $70,000 again. However, traders may need to be wary as volatility can be intense. In light of the prevailing price action, anyone opening a highly leveraged position could fall victim to a forced position closure.