Bitcoin (BTC), despite its rally to $44,000 due to US inflation data, traders believe there is very little chance of it making a sustained recovery.
Material Scientist, a data analyst, suggested that there may be a significant downside to Bitcoin price action in a Twitter conversation on January 12.
“Now we wait.”
Although BTC/USD is showing strength since it bounced at $39,600 most analysts still don’t believe that the overall downtrend has ended.
These voices of doubt continued after December’s U.S. inflation data showed a 7% increase year-on-year, even though spot prices briefly surpassed $44,000.
Material Scientist sees the problem in order books. Bulls are not looking good if bids drop below spot and resistance continues to rise immediately overhead.
After Bitcoin had reached its all-time high of $69,000 in November, this exact phenomenon occurred. The result was a quick crash to below $50,000.
“Remainder bids were just pulled. He summarized that either they are done with accumulating liquidity and want to chase now or we see the exact same thing as in November (pulled bids + stack asks a few days later).
“Now, we wait.”
BTC/USD buy/sell level heatmap (Binance), showing November’s bid and ask behavior. Source: Material Scientist/Twitter
Material Scientist said that if this is not the case, then a “relief rebound” could continue. However, it is time to “pay more attention to” the market setup.
Analysts who are open to interest
Others also urged caution regarding the near-term price trajectory.
Related: Bitcoin rises to $42K, as the bets favor a’short squeeze.’ Higher for BTC
Analyst William Clemente said that the absence of a liquidation chain, such as the one from December, was cause to be concerned.
Okay, ok. I need a liquidation chain. Open interest is rising every day that I check. Each day, I check OI and high OI. This is unacceptable. It’s what it is, but I need a liquidation chain. Can market makers do anything? ?
Will Clemente (@WClementeIII), January 12, 2022
Given the possibility of Bitcoin going either way, it was important to ask how far Bitcoin could climb or fall before making a decisive move.
“How much Bitcoin does it need to rise before people who were waiting to get $30,000 begin to FOMO into Bitcoin en masse, and trigger a short squeeze?” Mike Alfred, CEO, data resource Digital Assets Data asked.