Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Bitcoin made big gains in the past 48 hours as short sellers faced massive liquidations
- With their liquidity drying up, it could be difficult for BTC to move higher in the coming days
Bitcoin [BTC] pumped almost 6% in the last two days. Open Interest (OI) rose along with prices, showing bullish conviction in the short term. The higher timeframe charts showed that BTC was experiencing local resistance but had room for expansion northward.
Read Bitcoin’s [BTC] Price forecast 2023-24
The local resistance was in the $28.3k-$28.5k area. Bitcoin traded within a range of $24.8k to $31.8k, and the mid-range resistance was $28.4k. It was close to the $28.5k level, a long-term resistance. Could the bulls move past it quickly?
The price is attracted by liquidity, and Bitcoin bears have already been forced to retreat
Source: BTC/USDT on TradingView
Liquidation details of Mint glass showed that $60 million worth of contracts were liquidated in the last 24 hours, leaving $44 million short. This was evidence that a large portion of the short sellers had been wiped out.
Therefore, even though BTC has a bullish market structure on the daily chart, it may be difficult for the bulls to push prices higher. Instead, it makes more sense for the market to drop and chase the eager and possibly late bulls.
An ideal area for this would be visiting the $26.9k-$27.4k region. This zone had served as a resistance area since September 18 and was breached on October 1. There was likely a lot of liquidity around $27k, with a deeper retracement to $26.5k also possible.
The average coin age saw a notable increase over the past month
Source: Santiment
Data from the intelligence platform showed that BTC had been in an accumulation phase since early August. The increase in average coin age, even as prices hovered around the $26,000 level, was evidence of accumulation within the network. There is no intense sales pressure yet, because the dormant circulation has not shown any significant peaks recently. On the exchange flows front, this past week saw more BTC leave exchanges, and these findings painted a bullish picture for BTC.
How much is 1, 10 or 100 BTC worth today?
Crypto analyst CrypNuevo posted a seven-day Hyblok liquidation chart showing that almost $200 million worth of short liquidations could be achieved if BTC rose to $28.8k.
Therefore, we could see another rapid spike to chase this liquidity. After that, a reversal towards $27.5k or lower could begin, triggering the next round of massive liquidations of long positions.