Bitcoin (BTC) saw a quick rise to $90,000 just after the US stock market opened on Wednesday, only to reverse shortly afterwards. This indicates volatility in the cryptocurrency market and how price movements are still affected by liquidation events.
At the start of the trading session, Bitcoin suddenly broke above the $90,000 level, prompting a massive wave of buying. However, this rally did not last long, and the price dropped almost instantly after overcoming the key $90,000 resistance level. BTC slid back down to the $87,000 level, leading to liquidations in both long and short markets.
This sudden change in price led to over $120 million in liquidations in the crypto derivatives market in four hours, according to CoinGlass data. The reason for the sudden hike in Bitcoin's price to above $90,000 was primarily due to a squeeze in short positions, which caught traders by surprise.
Market analysts, such as Michaël van de Poppe, pointed out that Bitcoin’s price action is due to liquidity trends and not market sentiment.
The price movement due to liquidity was not an isolated instance. During the past few weeks, Bitcoin showed the tendency to move erratically, which in most cases was triggered by liquidation events.
As the BTC price neared $88,000, some traders expected that the cryptocurrency could move towards the range of $93,000 to $94,000 during the next breakout. However, some others believe that the underlying momentum in the crypto market is still weak and that Bitcoin is currently facing resistance at certain technical levels.
Although the recent Bitcoin price surge has brought some hope to the market, its sustainability has been a matter of concern. Technical analysts are very closely observing Bitcoin’s performance on its 100-week moving average (SMA) and Exponential Moving Average (EMA), which are placed just below $85,000. If it fails to stay above these levels, it could lead to a further breakdown.
Some market players think that if BTC breaks below the $85,000 support level, it could be on the verge of testing lower levels, including a projection to move towards $76,000. This negative sentiment is also in line with economic concerns.
Bitcoin's price movement is highly volatile and largely influenced by liquidity dynamics and short-term market sentiment. Although some analysts forecast further upside, others expect a fall below significant levels of support.