Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- A shorting opportunity could arise amid the volatility Bitcoin could face next week.
- Both bulls and bears could be cut to pieces in a consolidating market in the aftermath of the recent sharp decline.
The US Federal Open Market Committee (FOMC) will meet on June 13 and 14. The US Federal Reserve will not raise interest rates in June, according to economists polled by Reuters. Fed Chair Jerome Powell had signaled in May that the central bank could soon interrupt its walking cycle.
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What impact could this have on Bitcoin? [BTC]?
Bitcoin’s transaction count hit 1 million on two consecutive days last week, but this could be a signal that investors are moving toward self-preservation rather than an increase in buying pressure. The price action was bearish and further losses were likely in the coming days.
The previous liquidity hunt could provide an opportunity to go short
Source: BTC/USDT on TradingView
Due to the FOMC meeting, volatility can be expected in the market. A pause in the walking cycle would likely have a positive impact on traditional markets, which could see a brief positive reaction in BTC’s price charts.
Some key levels on the chart were $25.2k, $26.8k and $27.8k. Bitcoin’s market structure was bearishly biased on the 4-hour chart and the $27.4k level represented a recent lower high. A move above this level would indicate a shift in preference to bullish patterns, although it could also be a bull trap.
To establish a short-term uptrend, Bitcoin would need to register a higher low.
Given the trend on the daily time frame, a further downtrend seemed likely. The A/D line missed a strong trend in May but has crept lower. The CMF also showed heavy capital outflows from the market. Recent news from the SEC about Binance and major crypto assets being labeled as securities isn’t helping the bulls either.
Therefore, a move to the recent lower high can be used to enter short positions. It could be a risky venture, and risk-averse traders may want to wait for Monday’s highs and lows to set before looking for trades.
The decreasing CVD revealed strong selling pressure in recent hours
Source: Coin analysis
Bitcoin fell 4.95% as measured from the June 9 swing high to the June 10 swing low. This could increase if BTC drops lower in the coming hours. In addition to falling prices, spot CVD has also been on a steady downward trend, and has been so for the past week.
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This again emphasized the selling pressure. Open Interest also signaled bearish sentiment.
On June 6, when BTC bounced from $25.4k to $27.3k, the OI plummeted. This showed that the rally was running with short coverage – the OI has remained flat ever since. Therefore, with speculators sidelined and bearish price action, bulls should be wary of buying BTC above the $25.2k support.