On Tuesday, Bitcoin briefly surpassed $31,000, but the overall market performance remained relatively depressed due to the ongoing rout in the NFT space. Towards the end of the Asian trading session, Bitcoin was down 1% at $30,845, while Ethereum also experienced a 1% decline, trading at $1,938. The total market cap decreased by 1% to $1.25 trillion, indicating a relatively subdued market performance expected heading into the weekend.
How to Navigate Bitcoin Price Technical Outlook
Following the long weekend, investors returning to the market are noticing a decline in trading volume across major exchanges. CoinGlass data indicates that all major exchanges are reporting significant drops in volume, ranging from 15% to 20%. This decrease in trading volume has also affected the number of liquidations, totaling $47.67 million in the last 24 hours.
Despite the decrease in trading volume, the market has maintained open interest at $14.50 billion. The long/short ratio indicates that long traders have a slight advantage over short traders. However, trader sentiment remains a concern as a significant portion of traders is neutral, balancing the bearish and bullish sentiments. This indicates a lack of strong conviction in the market direction.
Where Is Bitcoin Price Heading?
The ongoing liquidity crunch, particularly in the fiat market, has had an impact on cryptocurrencies and other risk assets. This issue cannot be easily resolved and continues to affect the market. Additionally, with significant economic data scheduled for release this week, traders need to be prepared to respond actively based on the evolving circumstances.
Currently, Bitcoin is facing resistance around the $31,000 level, while its downside seems to be supported at $30,500. The inability to break above $31,000 narrows Bitcoin’s options for an upward move. As time passes without a sustained upward trajectory, the overhead pressure may weaken support levels, including the buyer congestion at $30,000. If the price breaks below $30,000, it could signal a loss of bullish momentum and potentially trigger a bearish response from investors aiming to protect their profits from the recent uptrend between $25,000 and $31,500.
If short traders take advantage of a sell signal from the Moving Average Convergence Divergence (MACD) indicator, it could increase the pressure on Bitcoin. This sell signal occurs when the blue MACD line crosses below the red signal line. Such a scenario could tighten the bearish grip, potentially triggering a selloff below $30,000.
Traders should pay attention to key levels, including the resistance at $31,000 and support at $30,000. A break and sustained hold above $31,000 could attract more investors and lead to a potential breakout towards $35,000 and $38,000.
However, if support at $30,000 fails, Bitcoin faces the risk of dropping to $25,000. Traders should consider the potential buyer congestion around $28,000, which could provide temporary support and allow Bitcoin to gather new liquidity before a possible bullish reaction.