Bitcoin has been fluctuating sideways, and this has put an end to retail investors. Considering the low volume and volatility structure of the market, a significant move is expected in the coming days. Over the past few days, both the bear and the bull struggled to win the game.
The price is currently at a critical level (orange box), and a break above or below this box will determine the mid-term direction. In terms of being supported by the Orange Zone, reaching $75K is not that easy. However, if the bears show more strength, the price will return to the lower base range (green) formed on the daily time frame over the past 12 months.
Hence, a drop to the $30K level in this scenario, forming a lower low, would confirm a bear market in the medium to long term.
onchain analysis
The chart below shows the estimated leverage ratio and price. It has risen and reached its highest level since last year. At the same time, the sentiment of the futures market is almost neutral (average funding rate is close to zero).
This indicates that an imminent volatility in the price is expected due to the liquidation of high leveraged positions. Thus, the market may be in a volatile phase in the medium term.
Let’s look at Binance and Bitfinex’s open interest indicators during the recent shakeout. We can see that the OI of Bitfinex has increased logically compared to Binance. Historically, whales and big players use Bitfinex to take their positions. So, looking at the significant increase in the OI of Binance, we can conclude that the retailers are opening most of the futures positions as they are mainly on Binance.
This may be the main reason for the high level of open interest. Considering the low levels of Binance’s funding rate, most futures positions are short, so the potential for a short squeeze scenario is high.
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Cryptocurrency charts by TradingView.