Bitcoin‘s ascent above $44,000 on December 21st sparked optimism within the crypto community, hinting at a potential revival for the flagship cryptocurrency, especially given its recent stagnant performance. However, amidst the rise, warnings have begun to emerge.
In the midst of excitement, cautionary voices are advising investors to remain vigilant despite the price increase. According to Greatest_Trader, a contributor to CryptoQuant, Bitcoin’s recent price movement has triggered an increase in long positions, as indicated by the positive funding rate.
A positive funding rate signals a prevalence of long positions in the market, reflecting a bullish outlook. However, Greatest_Trader notes that this trend could lead to an increase in long-focused liquidations, while also raising the potential for a scenario where a rapid sell-off could significantly impact the market.
To gauge potential liquidation points, the Liquidation Levels indicator by HyblockCapital, which identifies price positions at which a trader’s position could be liquidated, showed notable developments. The chart revealed a liquidity cluster between $44,900 and $45,870, where highly leveraged investors face a high risk of liquidation that could trigger a reversal in Bitcoin’s price.
The Cumulative Liquidation Levels Delta (CLLD) also contributed to the bearish narrative, with a positive reading indicating a potential full retracement that could push Bitcoin below $43,000. Analysis of open interest data from Coinglass showed that despite a drop in Bitcoin’s value on December 18th, open interest increased, suggesting an uptick in downward momentum.
As Bitcoin strives to reclaim the $44,000 threshold, assessing potential price movements becomes crucial. The rising open interest, coupled with the inability to surpass $44,000, heightens concerns of a potential drop to $42,000. Investors are advised to closely monitor the evolving market dynamics in the coming days. At the time of writing, Bitcoin is trading at $44,077.
