Bitcoin did not have a fun weekend. Low liquidity saw a sizeable sell-off in the late hours of Sunday/early Monday, and Bitcoin dropped 6.16% within six hours as a result.

It also dropped below the $90k mark, having established the $92k area overhead as a vital short-term resistance.

The bearish net taker volume mirrored the conditions on the 21st of November, but was not as extreme, noted crypto analyst Maartunn.

Worries about Tether’s insolvency in the event of a combined gold and Bitcoin drop added to the fearful sentiment across the market.

The drop also saw $650.67 million worth of positions liquidated across the market, according to CoinGlass data at press time.

Structural trends: Where Bitcoin stands

Analysis showed that the fear around Bitcoin was warranted. The drop from $107.5k to $80.6k in November had very few periods of respite.

The past week’s bounce was halted even before the 50% retracement level at $94k was tested.

This reflected intense bearish pressure. The next target was the $74.2k Fibonacci extension level. Incidentally, the $74k-$76k area served as a market bottom in April.

The two-week liquidation chart highlighted two things. The first was the dense collection of liquidation levels in the $83.3k-$85.5k area. Therefore, a further Bitcoin drawdown to sweep this liquidity is a likelihood.

The second was the lack of liquidations built up between $86k and $92k, a result of the speed of the recent price drop.

Two things can happen — Bitcoin can race higher to $95k, the magnetic zone overhead, after a sweep of $84k.

Or, Bitcoin could form another range and meander aimlessly. In doing so, it would build liquidations at the range extremes.

Once done, perhaps over a period of a week or two, BTC could hunt the liquidity at the range’s high before falling lower, right before smart money goes away for the festive season.

Momentum and volume readings

The OBV on the daily timeframe showed steady selling pressure, and the RSI below neutral 50 reflected bearish sentiment.

There was no evidence of a bullish divergence of any kind on the 1-day or 4-hour timeframes.

Mapping the structural floors and ceilings

The $94k was a technically important resistance level. Liquidation levels around $95k also made it an enticing target to the upside. The immediate targets were downward.

A revisit to $80.6k, the low made last Friday, is expected in the short term. On the way, the $83.3k-$85.5k could trigger a price bounce after a sweep of this magnetic zone.

Further south, the long-term support at $74.5k beckoned.

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Final Thoughts

• The overarching trend of Bitcoin remains firmly bearish, so any price bounces are for selling.
• It remains to be seen if Bitcoin will form a range and build up liquidity on either side, or race higher to $95k before dumping lower once again. Traders need to be prepared.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion

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