Bitcoin holds on to $88K as regional markets choose caution: What’s next?
The swift rallies and full retracements Bitcoin has witnessed over the past month translate into a "pressure cooker" environment for traders.
Bitcoin [BTC] continued to meander within the $85k-$90k range. The leading crypto’s price action has been bearish since the 10/10 crash.
The trend has not been as strongly bearish in December, as downward momentum appeared to stall at the $84.5k support.
Though there wasn’t a defined trend, the volatility has been sharp in recent weeks. Each foray toward the $90k resistance zone has been met with a sharp rejection since the 15th of December.
At the time of writing, Bitcoin was hovering around the $88.3k level as regional stock market indices showed a little movement during the thin-liquidity conditions at the year’s end.
Data showed that the S&P 500, the SSE Composite Index, and the KOSPI Composite Index had all moved 0.15% or less for the day. The Nikkei 225 saw a slightly bigger drop of 0.37%, or 187 points, which was still minor.
This hinted at caution in the stock market. Combined with the lack of demand in the Bitcoin market and spooked investors, it was possible that a bearish turn could descend into a liquidation cascade.
What to expect from Bitcoin in the coming week
Thin liquidity meant that price moves will continue to lack a trend over the next week.
Magnetic zones with dense liquidation levels will be targets for bull or bear squeezes. More of the kind of price action of the past month is expected.
This expectation would change if the $94.5k or $$85k levels are breached on significant trading volume.
The spot ETF flows showed seven consecutive trading days of ETF outflows, from the 18th to the 29th of December. This finding supported the idea that demand was weak.
The realized volatility of Bitcoin has increased dramatically since October, nearing the March-April figures. Higher values mean higher risk in the market, and is measured using log returns over a fixed time period.
It is not clear which way the next move would go, but one thing is clear. The price action was getting compressed within a tight range, with swift rallies and full retracements. An explosive move is imminent.
Final Thoughts
- The Bitcoin price action did not show a clear short-term trend yet, but the realized volatility has picked up over the past two months.
- The spot ETF outflows and prices bottled below the $90k resistance highlighted bearish dominance.
