Since $43,000 has been cleared, bitcoin traders are finding support below the spot price, according to BTC price analysis.
On January 30, Bitcoin reached two-week highs amid warnings from traders about decreasing order book liquidity.
After the Wall Street open, a following consolidation began, with $43,500 serving as the focal point at the time of writing.
Hence, Bitcoin profited from a shift in sentiment that occurred over the weekend, rising nearly $5,000 above its previous two-month lows.
The improvement coincided with noticeably lower withdrawals from the Grayscale Bitcoin Trust (GBTC), one of the recently established spot Bitcoin exchange-traded funds (ETFs), as Cointelegraph reported.
As part of an intraweek range, bulls now met strong resistance near $43,800.
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In part of the day’s posts on X (previously Twitter), well-known trader and analyst Rekt Capital stated, “Trying hard to invalidate its Weekly Bearish Divergence (which arguably already played out on last week’s dip)”.
Well-known trader Skew cautioned that a rematch with range highs at $48,000 observed earlier in January would still require strong buyer conviction.
“This price has a much thicker ask depth, suggesting more supply overhead that impacts taker flow.
Significant volume buying will be necessary to factor into the price in order for the price to test $48K+,” he informed X members.
With the exception of $42K and $40K, bids on the orderbook are fairly thin at this point; bid depth below $38K is thick.
Speaking about liquidity, the trading resource Material Indicators observed that there were no bids that were directly below the spot price, which may have created a downward trend.
A section of an X analysis stated, “Much of this move since Friday has been choreographed anticipating Wednesday’s FED announcement and BTC Monthly candle close.”
“Don’t be shocked if we see this move retrace itself, as bid liquidity is thinning below us.”
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Meanwhile, Keith Alan, a co-founder of Material Indicators, hypothesised that this week’s conditions would create the ideal storm for cryptocurrency volatility.
In a video update that day, he stated that although he was “not expecting” a surprise at the rates meeting, the Fed’s economic commentary along with the scarcity of liquidity could cause headaches for Bitcoin dealers.
The entire world was focused on Fed Chair Jerome Powell’s news conference and address.
“There is a possibility that he will indicate a slight shift in the market and suggest that the Fed may not make as big of a cut as the market had anticipated. This could lead to some volatility,” he said.
As of this writing, there was a little less than 40% chance that rates would drop starting in March at the next Fed meeting, according to data from CME Group’s FedWatch Tool.
In a series of updates on X (formerly Twitter), renowned trader and analyst Rekt Capital highlighted the ongoing struggle to invalidate Bitcoin’s Weekly Bearish Divergence, noting its potential impact on recent price movements.
Meanwhile, another prominent trader, Skew, cautioned that revisiting range highs at $48,000, observed earlier in January, would demand robust buyer conviction due to the significant ask depth and supply overhead in that price region.
Skew’s observations are supported by market data showing that, apart from key levels at $42,000 and $40,000, bid orders on the order book are relatively sparse, with bid depth notably thicker below $38,000.
Material Indicators, a trading resource, noted the absence of bids directly below the spot price, indicating a potential downward trend exacerbated by thin bid liquidity.
Analysts and traders are closely monitoring market dynamics ahead of Wednesday’s FED announcement and Bitcoin’s Monthly candle close.
Speculation is rife that recent market movements are choreographed in anticipation of these events.
Keith Alan, co-founder of Material Indicators, expressed concerns over the perfect storm brewing for cryptocurrency volatility this week.
While not anticipating surprises at the rates meeting, Alan warned of potential market turbulence stemming from the Fed’s economic commentary and the scarcity of liquidity.
All eyes remain fixed on Fed Chair Jerome Powell’s news conference and address, with any hints of a market shift likely to fuel significant Bitcoin price fluctuations.
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