Bitcoin’s double-top pattern increases the possibility of a drop below $90,000 if BTC loses a key support level on the daily chart.
price shows signs of weakness after failing to record another higher high pattern following last week’s drop below $95,000. The price rejection has occurred between $98,000 and $99,000 as BTC looks to retest its immediate support at $95,000.
BTC futures remain overleveraged
Data from CoinGlass indicated that Bitcoin open interest (OI) has dropped from $64 billion to $58 billion, a 9% drop since last week. However, the relative OI with respect to the BTC-USDT perpetual futures pair remains overleveraged compared to its early-year high in March 2024.
The chart illustrates that the OI to USDT reserve ratio concerning the BTC futures pair is still twice as high as Match 2024, where the previous all-time high (ATH) was established. Thus, the BTC future market remains overleveraged with a possibility of a flush down despite the drop in open interest over the past week.
Aggregated order books at centralized exchanges indicated large sell orders around the $110,000 level, which hasn’t been triggered yet. While this sell wall hasn’t been hit, the likelihood of price reversing before such a strong order can keep potential long traders sidelined, as they would be aware of a limited risk-to-reward ratio on the upside.
Bitcoin corrections under $90K are “short-term”
From a technical standpoint, Bitcoin’s four-hour chart pictured a confirmed double-top pattern with $95,000 as its base trendline. A daily close under the $95,000 mark will increase the probability of another decline near the $92,000 and $90,000 range. The relative strength index (RSI) also exhibited a rejection below the 50 level, which means selling pressure is gaining momentum.
While the 100-day EMA level (green line) is immediate support, historically, it has been a weak reversal point if tested within short-term periods of time (the 100-EMA was tested once last week). Short-term corrections down to $90,800 are a technical target from the double-top pattern, but prices may swipe the key liquidity zone under $90,000.
Byzantine General, a crypto futures analyst, hinted at a similar move for Bitcoin, with a liquidity sweep around the $85,000 mark over the course of December. However, the analyst said future drawdowns would be “short-term corrections.”
Meanwhile, DonAlt, an anonymous crypto trader, said:
“Probably giga sends on a close above $98k towards $110k Probably wipes everyone on a dip to $80k if it loses $90k Probably ranges while neither has happened.”
Source: Cointelegraph
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