One analyst is now explaining that he believes this next movement will be crucial for determining which direction BTC trends next, as it could create a cascade of liquidations.
The last time Bitcoin saw a torrent of liquidations was during its mid-March decline, which is what helped drive it to lows of $3,800. It is important to note that this trend will significantly magnify the next movement, making it imperative that buyers step up and gain the upper hand if they want to avoid another prolonged downtrend.Bitcoin Likely to See Another Cascade of Liquidations Once Sideways Trading Bout Resolves
At the time of writing, Bitcoin is trading down marginally at its current price of $9,220. This is around where it has been hovering throughout the past week. Although buyers have attempted to propel it higher on multiple occasions, each one was met with significant selling pressure around $9,400. This unrelenting bout of sideways trading is unlikely to last for too much longer, as BTC’s volatility has now reached historically low levels. One analyst is that Bitcoin’s next bout of intense volatility could create another cascade of liquidations. He describes it as “dominoes falling” and explains that it will likely magnify the size of the movement – regardless of which direction it is in.“Bitcoin is so compressed that any break likely will get the dominoes falling. Even intraday stop clusters hitting should be enough to carry into the longer-term position areas to get the cascade going.”
Will This Next Movement Favor Bulls?
While looking towards some striking similarities between Bitcoin’s current price action and that seen when it was trading around $6,000, it does appear that this next move may favor bulls.
One analyst showing that if BTC repeats the price action seen when it was at $6,000, it could soon post a breakout rally.“I guess the current bias can depend on whether you count the lower low in March as a black swan or simply go by the market structure. One way or another you can’t deny that PA under 10k is awfully similar to the one we had at 6k.”
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How Bitcoin’s consolidation phase resolves will likely set the tone for which direction it trends throughout the rest of the year.
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