Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The price action at the range lows over the past week showed buyer conviction was waning.
- Bitcoin could be ready for a move downward, especially if the stock markets take a hit on Wednesday.
Bitcoin [BTC] saw a range established over the past month. There were hopes of a bullish breakout on 13 July when the prices reached the $31.8k mark, but the bulls were quickly rebuffed. Over the past week, it appeared that buyers were losing strength.
Read Bitcoin’s [BTC] Price Prediction 2023-24
The next Federal Open Market Committee [FOMC] meeting will be held on 25 and 26 July. Expectations are mixed. Analysts on one side argue that July will see another 25-point hike in interest rates to combat inflation after the “hawkish pause” in June. If this does prove true on 26 July, it will see losses in the stock market. This would likely hurt the BTC market.
The plunge below the range lows followed a week-long skirmish at the $30k mark
Source: BTC/USDT on TradingView
The bulls and bears fought to seize control of the $30k mark over the past week. The range formation is only a month long. The inability of the bulls to force a rally back toward the range highs over such a long time as a week meant that seller conviction has steadily risen.
This was reflected in the CMF, which was unable to climb above +0.05. Instead, it was forced to sink below -0.05 once more to reflect significant capital flow out of the market. The RSI was also beneath the neutral 50 mark on the 1-day chart since 15 July, following the rejection at the range highs.
With the bears in a dominant position, a retest of the $29.8k-$30k area can be used to enter short positions. It was possible but unlikely that the recent drop below the range lows was a deviation. The amount of time BTC spent near the $29.8k mark hinted at bearish strength rather than whales looking to collect liquidity.
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The Open Interest chart showed strong bearish sentiment in recent hours but has that begun to change already?
Source: Coinalyze
Within the 12 hours before the time of writing, Bitcoin prices began to descend beneath $29.9k once more. This was accompanied by a surge in Open Interest from $9.55 billion to $9.81 billion. The recent drop to $29k and the bounce to $29.3k saw speculators flip flop from bearish to bullish.
This reinforced the idea that traders can wait for a bounce in prices before looking to short BTC. The rise in OI on the most recent candle suggested short-term bullish enthusiasm, which was likely misguided. The 4-hour and daily charts support a bearish outlook, and the next support levels for Bitcoin are at $28.5k and $27.3k.
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