Here are levels to watch as Bitcoin fights to avoid $30K July repeat

William Suberg Jan 21, 2022 Here are levels to watch as Bitcoin fights to avoid $30K July repeat

Bitcoin price action visits levels below $38,000 for the first time since August as losses continue to mount.

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Bitcoin (BTC) could well continue falling in the short term now that $40,000 support has disappeared, fresh analysis warns.

In its latest market update on Friday, trading suite Decentrader analyst Filbfilb raised concerns that the days $290 million in liquidations was not enough to avert a fresh tumble.

Next stop: $33,000 if leverage unwinds

After reversing at $38,250 overnight, BTC/USD looked decidedly unhealthy at the time of writing, putting in fresh lows prior to the Wall Street open.

Cross-crypto liquidations passed $720 million on the day, but for Filbfilb, this is historically a meager tally, and with liquidity likely concentrated below $38,000, the chances of a cascade being triggered are obvious.

“Liquidations since the push below $40k have been low so far, virtually not even registering on the chart in the grand scheme of things. At the same time, funding remains relatively flat, meaning the bears are wining against margin traders who are almost all underwater,” he wrote.

“We have been talking about the liquidity which likely lies below $38K for some time.”

Should spot price begin to unwind leveraged positions there, the next stop for “relief” lies at $33,000. The update continued:

“If the $38k level is lost with some increased momentum, we are expecting a liquidation event similar to that of 4th December 2021 and a move towards $33k in the first instance, possibly tagging the 100 Week Moving Average, at c.$31,500, but $33,000k also being a potential level for some relief.”

Such an outcome would place Bitcoin on track for a copycat finish to that from July, the month in which it put in a floor just below $30,000 — near its 2021 opening price — before recovering.

BTC/USD anotated chart showing liquidity in blue (screenshot). Source: DecentraderDaily close above $40,000 required to usher in rebound

Meanwhile, to secure further upside, things would need to change significantly.

Related: Crypto liquidations pass $700M as altcoins take a hit from Bitcoin sinking below $40K

An uptick would have to be accompanied by negative funding rates, showing that shorters were in suitable disbelief at the staying power of a rebound. The ratio of long to short positions should also decline in step, Filfilb argued.

A daily close above $40,000, he concluded, would go some way to permitting such a scenario.

At the time of writing, BTC/USD circled $37,900 as volatility once again increased, data from Cointelegraph Markets Pro and TradingView showed.

BTC/USD 1-minute candle chart (Bitstamp). Source: TradingView

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