Bitcoin (BTC) enjoyed its weekly volatility dose on Sunday night, increasing around $ 107,000, before decisively falling to $ 102,000.
The cryptographic market generally experiences an increase in volatility at this time on Sunday, since it coincides with the opening of the CME futures market, which takes a few minutes to recalibrate to the lower liquidity crypto markets 24/7.
This weekend was slightly different. While on the surface, the price action will decrease as a bearish rejection of a key level of resistance, which Bitcoin has now failed to break into three attempts. BTC actually shot first in the CME, indicating that the price action was directed by US institutional merchants instead of retail cryptocurrencies.
In recent months, the CME often opened lower than Friday, creating a “gap” in the table, which did not happen this week. As the price was beating around this range of $ 5,000, the movement eliminated liquidity on both sides, creating a fairly crucial turning point.
Now, market depth up to $ 110,000 is minimal compared to limited orders that cover the book at $ 100,000. This means that any upward thrust will probably eliminate this level and see Bitcoin’s trade in a new record.
However, it is worth considering the other side of the currency. It is also conceivable that the action of Sunday night was a typical Stop-Loss hunt, which involves merchants aimed at an area where those in short positions would like to leave, thus creating a boost in the purchase pressure as short merchants run to buy their position.
This strategy often takes place together with the entry into a larger short position. For example, if a merchant wants to cut BTC with a risk tolerance of 4%, it would be advantageous to open that position at $ 107,000 with a loss of stop at $ 111,280 instead of $ 105,000 with a stop at $ 109,200. Cunning merchants can ensure that entry evaluating liquidity levels and squeezing short positions at the closure, which temporarily elevates the price to an ideal entrance.
In any case, with the liquidity now relatively low around the maximum record, Bitcoin is to a news catalyst of what a rising thrust expected, and these potentially frequent short positions at $ 107,000 could provide the ammunition to that eventual rupture.
