Surprisingly, Bitcoin (BTC) rebounded from its recent decline and quickly gained $1,000 as shorts in the cryptocurrency market felt the heat. But overnight, on September 12, the price of the leading cryptocurrency fell to $25,000, marking its weakest performance since mid-June. So, what’s next?
Important range determined for Bitcoin
Analysts observed that Bitcoin’s rapid recovery mirrored levels seen after the weekly close, indicating that the crypto market remains highly volatile. At the time of this writing, Bitcoin had reached $26,000 but was still facing resistance at this level. Before the rally, on-chain tracking resource Material Indicators had issued a warning about an upcoming “support test.” This was due to decreased bid liquidity later in the order book.
Interestingly, previous cases of “rug pulls” where liquidity was removed from the market around the spot price ultimately resulted in upward momentum for Bitcoin. Co-founder Keith Alan predicted that $24,750 would act as an important support level during the downtrend, and this prediction remained valid at the time of writing. This rally, which some have called a “classic short squeeze,” has sparked optimism among traders. In particular, popular trader Skew called for surpassing the $26,000 resistance level, highlighting the importance of the $25.6K – $25.3K range to confirm buyer interest.
$12 million was liquidated
Data from tracking resource CoinGlass revealed that total BTC short liquidations exceeded $12 million on September 12. In contrast, long positions totaling $71 million suffered losses the day before. Amidst this market turbulence, some traders are waiting for the next upward move for Bitcoin. Another well-known trader, Credible Crypto, pointed to a potential break in Bitcoin market cap dominance as a harbinger of an upward price surge. Local dominance, a situation that previously led to significant gains above $7,000 in two weeks, underlined the ongoing test of the downtrend. Credible Crypto said:
With the bullish market structure in BTC intact, 24.8k held, and BTC dominance broken, I think there is a good argument that the next impulse level is near.
There is a lack of catalyst in the Bitcoin market
The recent surge in Bitcoin’s price, described as a short squeeze, reversed the cryptocurrency’s slide to three-month lows below $25,000. The decline is due to the unwinding of derivatives bets, as evidenced by the decline in cumulative open interest in futures and perpetual swaps traded on various platforms. The decline in open interest coincided with short sellers abandoning their bearish positions as funding rates turned positive.
However, despite this impressive recovery, the Bitcoin market is facing challenges, including a lack of immediate bullish catalysts. Optimism surrounding a Bitcoin spot ETF has faded, and market watchers have turned their attention to the impending liquidation of altcoin holdings by the FTX exchange. Some analysts remain bearish as long as prices remain below the 50-day simple moving average.
Matrixport also determined critical levels
“Bitcoin price is below the 50-day moving average of $27,731,” said Markus Thielen of crypto services provider Matrixport. It is at $25,836, which indicates a bearish trend. Additionally, the weekly price decreased by 0.5 percent. “In general, the trend is downwards, which indicates a downward trend.” As a result, Bitcoin’s recent price surge has kept traders on edge. As the crypto market continues to navigate uncertain waters, both bulls and bears are closely monitoring key support and resistance levels.
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