Lately, the price of bitcoin has been under heavy selling pressure. This is partly explained by the attacks of the American regulator (SEC) on the crypto ecosystem. This phenomenon has unfortunately driven the price of bitcoin to new lows since its ATH of this year 2023. However, the last weekly candle still closed in the green.
Bitcoin rebound?
When looking at the liquidation data via Coinglass, we can see that the June 5 bearish movement caused the most important liquidations since early 2023 on Bitcoin.
Liquidations refer to forced closures of positions by traders due to a stop loss being reached, a significant loss or even a insufficient margin. Too large a succession of liquidations can lead to what is called a “liquidation stunt”which can trigger an increase in volatility on the asset in question.
BTC Total Liquidation Chart
The current technical analysis was carried out in collaboration with Elie BR, passionate investor and trader in the cryptocurrency market. Today trainer at Family Trading, a community of thousands of own-account traders active since 2017. You will find lives, educational content and mutual aid around the financial markets in a professional and warm atmosphere.
Here we have dealt with liquidations of long positions, which naturally benefited from the selling pressure on the price of bitcoin. This scenario has legitimately accentuated the uncertainty and fear linked in the cryptocurrency market.
However, let’s look at the bright side. A good number of long position liquidations allows a market to breathe and leaves room for opportunities for investors seeking to enter the relevant market.
Unexpectedly, at the end of last week, the bitcoin eventually turned green. Indeed, bitcoin has resumed bullish momentum after filling its visible gap on futures contracts between $25,040 and $24,840. Bitcoin formed a nice clearly visible bullish engulfing within the span of 8 hours, showing a buyer power beautiful and well presented. We can confirm these statements when we look at the price of BTC. The latter left behind its former consolidation zone above $26,000 and the 50% Fibonacci retracement zone, taken into account from the last low made on March 10, 2023.
Moving averages
These latest fluctuations have caused the price of the BTC to return slightly above the MA 50 in 4 hours, but not above the MA 200. On the other hand, bitcoin went back above the MA 50 and 200 in the daily period, still crossing in the right direction, which can be well received by investors.
The RSI (Relative Strength Index)
Oscillator side, ROI went back slightly above 50, which shows us a takeover of the buying force.
An interesting factor for the bulls is the formation of a slight bullish divergence visible over several time frames, which could be confirmed in the next few days.
Bitcoin Price Assumptions
Confirmation of a bullish recovery
In this case, the first objective would be the reintegration of the former consolidation area between 26,600 and 27,400 dollars. The $27,000 psychological zone should be challenging given that it lies at the top of the descending channel bitcoin started, and it is also very close to the 200 4-hour moving average. The importance of this level can be confirmed in view of the VRVP.
Thus, the break of this level could give way to a buying pressure which could give us even higher targets if the sellers give way. The first would be $28,000, before aiming for $29,000, then $30,000 and potentially more.
Bearish recovery
In this scenario, the $26,000 would be the first goal. If the latter is clearly broken, then we could possibly retest the $25,000 area. Once again, if this last zone is clearly broken, the next threshold would be near $24,500, if not $24,000. This level could be important when paying attention to the VRVPas well as its location at the bottom of the downtrend channelvery close to 61.8% Fibonacci retracementstaken into account from the last low made on March 10, 2023. The breakout of this level could at the same time be a sign of bad omen and lead to testing the $23,000 zone, and more if the latter is not defended.
The last scenario would be more boring, with a large consolidation around $26,000 and $27,000.
Conclusion
Bitcoin showed resistance at the $25,500 level. Following such a rise, it can be deduced that the sellers took their profits at this level, thus leaving the buyers to come back to face. From a technical point of view, the next movements are likely to be decisive as to the turn that bitcoin will take in the medium/long term. We must hope for a renewed confidence and a massive return of buyers, to counter the downward trend that the parent cryptocurrency is following. For the moment, we are off to a pretty good start, but nothing is decided yet. It will be important to carefully observe the reaction of the price on the different identifiable levels to confirm or not the different hypotheses made. Beware of potential “fake outs” and “market squeezes” in each situation. In addition, it should be remembered that these scenarios are based solely on technical analysis. The price of cryptocurrencies can change more or less quickly, depending on other more fundamental factors.
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