• Bitcoin lost steam the previous day and seems poised to re-test its support levels in the coming days.
• Short positions worth over half a billion dollars were liquidated as the market trended to the upside.
• The market could see a shift in momentum as long positions become the target.
The cryptocurrency market is in a state of flux, with Bitcoin (BTC) being the biggest beneficiary of the current positive macroeconomic winds. The number one crypto by market capitalization has been on a tear, with a 16% gain in the last seven days alone. At the time of writing, BTC trades at $20,800 with a 3% loss in the last 24 hours.
However, the rally may be losing steam as the market seems poised to re-test its support levels in the coming days. This is due to a shift in momentum, as over-confident long positions become the target. This could be attributed to the large number of short positions that have been liquidated in the past week. NewsBTC reported that short positions worth over half a billion dollars were taken out as the market trended to the upside.
The critical support levels to watch out for are in the $19,600 – $19,700 range. This is due to the confluence of the 200-Day Simple Moving Average (SMA) and 50x leverage longs in this area. There is a high liquidity pool sitting at these levels, ready to be taken by market movers.
On higher timeframes, a recent report from QCP Capital claims the macroeconomic winds might change and could negatively impact crypto. 2023 kicked off with a strong start for Bitcoin, with optimism in the air that it could reach its all-time highs of $20,000. However, this optimism could be short-lived as the market may be nearing a critical juncture.
It remains to be seen whether Bitcoin will be able to hold on to its gains or if it will succumb to the bearish pressure. If it does, it will be interesting to see what the market does next and whether this is just a temporary hiccup or a sign of a deeper correction.