Crypto Setting Up For Squeeze, Will BTC Price Get In The Way?

Bitcoin is showing weakness as BTC price trades in a tight range, the number one crypto by market cap saw a small uptick in volatility during today’s trading session. The price action was muted by weak performance in traditional equity markets.

BTC prices are currently trading at $19,000. There has been a loss of 4% over 24 hours, and an increase in losses for the week. The momentum indicator shows that Bitcoin is trending lower towards support. This suggests there’s little reason to believe bullish momentum will resume.

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BTC’s price trends lower on the 4-hour chart, heading into yearly lows? Source: Tradeview for BTCUSDT

BTC price liquidity trends to the downside as Bitcoin loses $19,000

In the coming two weeks, the crypto market will go through a major milestone with Ethereum’s “Merge”. It will become a Proof-of-Stake (PoS), consensus when the second cryptocurrency by market cap is completed. ETH has outperformed BTC in price.

“The Merge” is scheduled for mainnet deployment between September 13ThUp to 15ThThis event will bring market volatility. Today, Ethereum core developers announced the successful implementation of the “Bellatrix” update.

Just a few hours later the BTC market price broke below the critical support area and trendline that had been established after the August bullish prices action. Material Indicators’ data indicates that the liquidity in the Binance orderbook has been thickening to the downside.

As the price of Bitcoin trends lower, liquidity followed and sits near the cryptocurrency’s yearly lows between $17,600 to $18,000. All investors, large and small, have sold into the price action in the interim.

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BTC Price (blue Line on Chart) is moving towards downside liquidity in short timeframes. Source: Material Indicators

If today is any indicator of what traders should expect from “The Merge”, and bulls can support BTC price’s current levels, the cryptocurrency might take another leg down into the pool of bids shown in the chart above. Next important support levels for the cryptocurrency are $17,000 and $16,000.

For a deeper dive into “The Merge” and its potential implications for the price of Ethereum, check out the analysis from our Editorial Director Tony Spilotro.

BTC Prices Drop in Institutions, BTC Will Not Retest Yearly Lows

The second major catalyst for the crypto market will take place during “The Merge”, the U.S. will publish its most recent Consumer Price Index (CPI) that will provide more clues into the country’s inflation. NewsBTC reports that the U.S. Federal Reserve has aggressively tried to control inflation by raising interest rates.

As a result, risk-on markets are trending lower. The September 12ThCPI print continues to trend downward in July, but the Fed may hint at some adjustments to its monetary policy. This might allow BTC and other cryptocurrency prices to recover their bullish momentum.

QCP Capital recently reported on a decrease in long positions by institutions (blue line, chart below) as they increased their shorts. This is a hint at the expectations of these entities for the short-term. According to the trading desk:

In September will be the decisive moment in determining whether macroeconomic conditions are as bearish as market hope or whether historical proportions of squeeze.

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As shown below, institutions are going short. Source: QCP Capital

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