Bitcoin Crashes To $19,6k And Takes Liquidity, Ready To Bounce?

Bitcoin is recovering after rejecting north of the critical resistance around $20,000 and may be preparing for a downward move to the final support level. The cryptocurrency was seeing some gains earlier this week, but any bullish momentum has been wiped out by macroeconomic forces.

At the time of writing, Bitcoin (BTC) is trading at $19,600 with a 2% loss in the last 24 hours and sideways movement over the week. The rest of the cryptocurrency market is following the sentiment in the cryptocurrency market proving, once again, that any potential rally is limited by the bigger picture.

BTC price collapses on lower time frames. source: BTCUSDT TradingView

Bitcoin Takes Leverage Long, Is It Time to Squeeze?

According to Analyst Justin Bennett, Bitcoin made a negative trend towards $19,600 and slightly lower to remove leveraged players from their positions. Cryptocurrency often moves in the opposite direction to the majority of traders and runs for liquidity pools created by excess leverage positions.

In this case, retail traders may join the bullish price action they have experienced this week by entering long positions in hopes of further upside. Bennett Believes That with these players out of the way, the market may be ready to bounce back:

Long BTC liquidations reach $19,600, as reported yesterday on Discord. Now maybe it’s time to bounce back to $20,500. Just trading both sides of the range for now.

Overall, Bennett has been bullish on Bitcoin and will remain biased as long as the price of BTC remains above $18,700. This price is the bottom of a potential channel that the cryptocurrency has created over the past months.

The recent price action was hinting at a longer rally in the $26,000 region. In the short term, with leverage out of the game, it may be time to squeeze short positions. analyst added:

I still think it’s only a matter of time before we see short liquidations between $20,450 and $20,800. Just playing in the range now.

Macro forces pressure the cryptocurrency market

What prompted Bitcoin to crash from its weekly high? A trader with a pseudonym believes that this was the latest data on job numbers in the US economy. This report may provide support for the US Federal Reserve to continue raising interest rates to reduce inflation, and thus reduce risky assets.

As NewsBTC reports, the Fed’s monetary policy has been costly for stocks and the cryptocurrency market is moving in tandem with these assets now, with job numbers telling the financial institution that it can continue to put pressure on the markets.

However, this trader believes that the recent price action has returned to the sideways, and that Bitcoin may avoid any catastrophic bearish price movement for the time being. Via Twitter, this merchant He said:

This brings us back to the middle of the 18.5-20.5K perpetual zone which is why we are quite far from any breakout, be it up or down. Unless something special happens, I’d say we’ll probably stay inside that territory roughly until at least next Wednesday’s CPI number.

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