Bitcoin has fallen to its lowest level in 82 days, with trading prices approaching $72,936. It has dropped by 3.5% in the past 24 hours and by 6.2% in the past week. In this price trend, there is one aspect that concerns traders: despite the decline in Bitcoin prices, the scale of leveraged funds betting on Bitcoin continues to rise.
Abnormal accumulation of leveraged positions
The size of open contracts, namely the total value of outstanding futures positions, has been steadily rising since the beginning of October, while Bitcoin has been on a downward trend all along.
This is not usual. Typically, when prices fall, traders using leverage are forced to exit their positions, and the number of open contracts also decreases. But this time, the situation is the opposite. When these positions are finally closed or liquidated, the result could be a "huge volatility event."
Bitcoin remains stable in response to the overheated CPI data.
The latest round of declines occurred after the U.S. inflation report came in higher than expected, which increased the market's probability of a Fed interest rate hike in December. Experts Micha ël van de Poppe stated that Bitcoin's reaction to this report was “quite good,” but the overall trend has not changed. Bitcoin is still in a downward trend and needs to rebound to a key level before it can turn bullish.
van de Poppe There are also signs of early activity among altcoins, as they begin to show different trends from Bitcoin. In his view, once Bitcoin finally bottoms out, this divergence could lead to a "strong rise" for altcoins.
Key price levels that traders pay attention to
Bitcoin has fallen below the support range of $74,000 to $76,000 that it had maintained for several weeks. Now the market's attention has turned to lower levels:
- $71,800: Analyst Tara believes this is the next support level, suggesting it could lead to a short-term reset for the market.
- $69,000: Tara calls this “the level that deserves the most attention.” She stated that if a successful backtest at this level is achieved, it may confirm a trend reversal. However, how Bitcoin reaches this level is just as important as the level itself.
There is still a possibility of a short-term rebound.
A new bullish divergence is forming on the 12-hour chart. The price of Bitcoin has reached a lower low, while the momentum, measured by RSI, may be forming a higher low. This situation usually occurs before a short-term rebound.
If this signal is confirmed, the next upward target will be between $76,500 and $77,000, as a batch of liquidation orders are accumulating in this range. The last time this signal appeared was in mid-October, when Bitcoin enjoyed a small respite of about a week before falling again.
A bigger picture
Looking at a longer time period, the prospects are mixed:
- In the long run: The Supertrend indicator on the weekly chart remains green, and the bullish divergence that formed in late June and early July is still valid. The last time a similar signal appeared was at the end of the bear market in 2022.
- In the medium term: The bearish divergence on the three-day and daily charts has not been reversed, which indicates that momentum will be weak in the coming weeks.
If there is a stronger rebound in the U.S. stock market, it could help Bitcoin. Otherwise, any rebound might just be short-lived.
What to focus on next
- Whether Bitcoin can hold above $71,800, and the reaction if it touches $69,000
- Will the open positions continue to rise, or will they start to fall?
- If the short-term bullish divergence is confirmed, will the price move towards $76,500 to $77,000?
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