Bitcoin (BTC) broke above $56,000 at the opening of Wall Street on August 7, raising concerns about a lack of support.
Bitcoin Fights Death Cross and Liquidity Shortage
According to data from Cointelegraph Markets Pro and TradingView, the BTC price rally is stalling, with BTC/USD remaining unchanged from its daily opening price.
Bitcoin is still up about $7,000 from its six-month low recorded on August 5, but continues to worry market observers amid uncertainty.
After analyzing the order book situation on the exchange, trading resource Material Indicators concluded that the price could move in either direction depending on the current buy and sell liquidity.
“The amount of BTC short liquidity between here and the CME gap fill is significant, but not insurmountable,” reads a recent post on X.
“The concern is that there is no significant buying barrier in the active trading range to provide a basis for a stronger upside. We will see if that changes after TradFi opens and the CME gap opens for trading.”
The post mentioned a “gap” in the CME Group’s bitcoin futures market, which it said would potentially create a magnet for prices between $57,845 and $58,845.
Keith Alan, co-founder of Material Indicators, then warned of two death crosses involving different moving averages, but added that the anticipated downtrend could still be tempered.
“Both Trend Precognition and MACD indicate momentum changes on the daily chart of Bitcoin. The strength of these signals has been somewhat weakened by the death cross between the 21 and 100-day MAs. The 50 and 200-days also appear to be on a similar path,” he explained on X, citing proprietary trading indicators from his platform.
“It is worth noting that the death cross is a lagging indicator. A quick recovery could unravel it, and if BTC bulls can fill the CME gap today and continue to rally, that would be a bullish signal. Failure to fill the gap or being rejected at the top of the gap would be a bullish concern.”
Bitcoin traders show cautious optimism
Macroeconomic conditions remained volatile throughout the day, with traders adopting a noticeably “wait and see” attitude.
Related: Bitcoin Needs Weekly Close of $59.1K Amid Doubts About BTC Price All-Time High
Trading firm QCP Capital has told cryptocurrency traders to monitor macro correlations in a recent announcement sent to subscribers of its Telegram channel.
“While the initial shock has passed, we expect selling pressure to continue in the coming days as systematic funds continue to reduce their exposure to heightened volatility,” it warned of the stock indexes.
“We recommend keeping a close eye on Nasdaq, Nikkei, and USDJPY as cross-asset correlations remain high in the short term.”
QCP reiterated its previous views on long-term profitability, arguing that cryptocurrencies should now be suitable for long positions.
“As the acute phase of market volatility comes to an end, we prefer to establish long-term bullish positions in anticipation of a cut cycle. We prefer trades with a time horizon of 3-6 months to avoid being cut given the higher volatility,” he concluded.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.