- Bitcoin’s bearish short-term outlook is reinforced by a series of lower highs in the past month.
- The cryptocurrency’s drop to $56.5k on May 1st suggests that liquidity below this level is likely to be tested soon.
- News of two dormant wallets selling $60.9 million worth of Bitcoin after 11 years of inactivity could potentially unsettle market participants.
Bitcoin’s bearish short-term outlook, reinforced by a series of lower highs, suggests a potential drop to the $56k mark and potentially lower. The cryptocurrency’s recent drop and news of dormant wallets selling large amounts of Bitcoin could unsettle the market.
Bitcoin’s Bearish Short-Term Outlook
Bitcoin [BTC] clung to the $60.7k support level over the weekend, but its short-term bearish expectation held weight. A recent AMBCrypto liquidity analysis showed where a price reversal could occur for this week’s price action. The report also highlighted a drop in key on-chain Bitcoin metrics.
Capital Inflows for BTC Show Indecisiveness
The range formation was breached conclusively on the 1st of May, when Bitcoin dropped like a rock to $56.5k. Even though it bounced to $65.5k a week later, its lower timeframe market structure was bearish. The 78.6% HTF Fibonacci retracement level at $55.5k might be revisited before the bottom is in. It is unclear how things would unfold, but traders and investors should be prepared for this scenario.
Spot CVD Disagrees with CMF Indicator’s Findings
Capital inflow and bullish conviction are necessary for an asset to trend upward. The Open Interest chart has been passive and lackluster over the past week as Bitcoin also struggled to form a trend. However, the spot CVD began to climb higher, and reclaimed a former short-term support level. This indicated buying pressure in the spot markets. Additionally, the past two days saw short positions liquidated. This forced market buy orders of the liquidated position and, if the trend continues, could see Bitcoin bounce higher.
Conclusion
Despite the bearish short-term outlook, Bitcoin’s market structure suggests a potential bounce back if the buying pressure in the spot markets continues and short positions are liquidated. However, traders and investors should be prepared for a potential drop to the $56k mark or lower.
