The recent drop in Bitcoin’s price to below the $94,000 support level has led to a significant amount of liquidations in the cryptocurrency market, totaling $242.21 million. This time, however, the difference between long and short liquidations has narrowed, with long liquidations totaling $128.98 million and short liquidations at $113.28 million. With Bitcoin currently trading at $93,990 and showing signs of a potential rebound, many are wondering if the cryptocurrency will be able to absorb the incoming supply for a bounce back or if it will test the crucial $90,000 support level.
Looking at Bitcoin’s price action on the daily chart, we see that the cryptocurrency has created its fourth consecutive red candle with an intraday pullback of 1.06%. Despite this, Bitcoin has managed to form a doji candle with a lower price rejection from the 50-day EMA, potentially setting the stage for a Morning Star pattern. While the intraday pullback may limit the chances of a significant rebound, the fact that Bitcoin is still trading above the 50-day EMA line indicates that a comeback is still possible. In fact, Bitcoin has bounced back from levels above $90,000 multiple times in the past month, showing resilience in the face of downward pressure.
However, the slowdown in bullish momentum has caused the RSI line to drop to 42.38, inching closer to the oversold boundary line. This suggests that the technical indicator is currently bearish, indicating a potential continuation of the downtrend. Additionally, institutional support for Bitcoin seems to be waning, with U.S. spot Bitcoin ETFs experiencing a daily net outflow of $226.56 million. While BlackRock remains a buyer of Bitcoin with an inflow of $31.66 million, Fidelity led the bearish pack with an outflow of $145.97 million. This lack of institutional support could further pressure Bitcoin’s price in the near future.
Based on the current price analysis, Bitcoin faces two possible scenarios. The first scenario involves a continuation of the downtrend, which would challenge the crucial dynamic support at $92,556. On the other hand, there is a chance for a Morning Star pattern to form and challenge the 20-day EMA at $97,896. However, if Bitcoin fails to form a morning star pattern and instead sees a bullish failure, it is likely that the cryptocurrency will retest the $90,000 support level. As Bitcoin remains at a crossroads, the downside risk for the cryptocurrency continues to grow, highlighting the uncertainty in the market.
