Bitcoin is fluctuating sideways, and it has exhausted retail investors. Looking at the market’s low volume and volatility structure, an imminent significant move is expected in the coming days. In the past few days, both bears and bulls struggled to win the game.
The price is currently on a critical level (orange box), and breaking above or below this box will determine the mid-term direction. In the case of being supported by the orange zone, reaching $75K is not so out of reach. However, if the bears show more power, the price will return to the lower base range (green) formed in the last 12 months on a daily time frame.
Therefore, forming a lower low, in this scenario dropping to $30K levels, will confirm the bear market for mid-term to long-term.
The chart below illustrates the Estimated Leverage ratio and the price. It has soared and reached its highest levels since last year. At the same time, the sentiment of the futures market is almost neutral (The average funding rate is close to zero).
It indicates that imminent volatility in the price is expected due to the liquidation of the high leveraged positions. Thus, the market might be in the ranging phase in the mid-term.
Let’s look at the Open Interest indicator of Binance and Bitfinex during the recent shakeout. We can see Bitfinex’s OI has risen more rationally compared to Binance’s. Historically, whales and big players use Bitfinex to take their positions. Hence, considering the significant rise in Binance’s OI, we can conclude that the retailers have been opening most of the futures positions as they are mainly on Binance.
That might be the main reason for the high levels of Open Interest. Considering the low Binance’s Funding rate levels, most of the futures positions are shorts, so the chance of a short squeeze scenario is higher.
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Cryptocurrency charts by TradingView.