Why Bitcoin bulls should be excited about a price drop below $30k
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The range formation presented a simple but strong idea for BTC traders.
- The dwindling spot CVD highlighted the risk buyers are taking upon bidding for the king crypto.
Bitcoin [BTC] saw an extremely strong bullish performance in mid-June. But after a week of gains, the bulls tired out, but not enough to hand the initiative to the bears. This saw their tug-of-war grind to a near standstill.
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On the lower timeframe charts such as H4 or shorter, the price action showed many opportunities for traders to seize. The latest one comes after the strong rejection BTC saw at $30.8k.
A retest of the recent lows could provide patient bulls a good risk-to-reward opportunity
On the 4-hour price chart, the short-term range that Bitcoin established in recent weeks was plotted in orange. It extended from $29.8k to $31.5k. The $29.7k was a likely target for prices to drop to, as it would likely trigger stop-loss orders from buyers as well as trick early bears into selling BTC. An upward reversal can commence after collecting this liquidity.
In the early hours of Tuesday, 11 July, Bitcoin saw a surge to the $31k mark halted in its tracks. This was not a good sign for bulls waiting for a move toward the range highs, for it highlighted the strength of the bears.
The brief foray past $31k served as a liquidity grab before prices reversed their trajectory and appeared to be headed for the range lows once more. At press time, BTC was trading at $30.4k, and the RSI showed the bullish momentum has waned.
The CMF also declined sharply, but continued to stay above +0.05 to show significant capital inflow. Meanwhile, the DMI showed there was no strong trend in progress, reinforcing the idea of a range formation.
Buyers can wait for a retest of the $29.7k-$30k area, with a stop-loss below the $29.2k mark as that would invalidate the range idea. The target is the range highs at $31.5k.
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The downtrend of the spot CVD could be of concern for short-term buyers
Long-term investors in Bitcoin need not be worried yet as the trend remained in bullish favor. But for the short term traders, the hefty downtrend that the spot CVD was in since 3 July was concerning. It highlighted steady selling pressure behind the king of crypto, even as it consolidated around the psychological $30k mark.
The bounce to $31k on 10 July saw the Open Interest react positively, showing bullish conviction from speculators. Although they were later discouraged, it remained likely that more buyers would be eager to bid BTC should it see strong lower timeframe bullish momentum.