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Bitcoin's position at the start of 2023 has left it susceptible to forming a "double top" structure, causing concern among analysts. With a weekly close below $26,000, BTC/USD struggles to gain traction, ushering in a period of low volatility. Analysts, who were already predicting a downside, continue to anticipate new local lows, with liquidity conditions bolstering their argument.
One on-chain metric suggests Bitcoin may be experiencing a significant event similar to March 2020. Furthermore, Bitcoin's relative strength index (RSI) is nearing its lowest levels since January, potentially leading to a rebound to "fair value."
Key Takeaways:
Double Top Formation: Popular trader Rekt Capital warns that Bitcoin may validate a double top structure on the weekly chart with a close below $26,000. This structure is characterized by two 2023 local tops above $31,000, separated by a retracement to $26,000.
Here's how the #BTC order book on @Binance is set up for the weekend.
— Material Indicators (@MI_Algos) September 8, 2023
I've pushed the Volume Percentile filter in #FireCharts a bit to highlight where liquidity is, as well as the dark zones of illiquidity that are at risk of being exploited. Not sure we'll see much volatility… pic.twitter.com/5liaqi22q7
Weekly Close Significance: The $26,000 level has served as support for three consecutive weeks, making the latest weekly close a significant indicator for Bitcoin's future direction.
200-Week Exponential Moving Average (EMA): The 200-week EMA, currently near $25,600, is seen as a point of optimism, signaling indecision in the market.
200-Week Exponential Moving Average (EMA): The 200-week EMA, currently near $25,600, is seen as a point of optimism, signaling indecision in the market.
CME Futures Gaps: Bitcoin's gradual decline has reignited discussions about its tendency to fill gaps on CME futures markets. An unfilled gap at $20,000 is under scrutiny, while another gap at $9,600 from September 2020 remains unfilled, highlighting the unpredictability of gap-fill behavior.
Liquidity Levels: Liquidity heatmaps show a significant block of bid liquidity around $24,000, the lowest concentration since March, indicating a potential dip below this level.
Consumer Price Index (CPI): The U.S. CPI release for August on September 14 is a potential volatility catalyst for Bitcoin, as it influences market expectations for Federal Reserve interest rate decisions. The Fed's upcoming decision on September 20 is expected to maintain current rates, potentially benefiting risk assets, including cryptocurrency.
UTXOs in Loss: The metric measuring the number of unspent transaction outputs (UTXOs) in loss, often seen as an indicator of a "black swan" event, has reached its highest level since March 2020.
