#Bitcoin continues to test traders’ patience, trading within a tight range with little price movement. For several weeks, BTC/USD has remained stuck in its three-month range, showing no clear signs of either a breakout or a breakdown. Despite hitting an all-time high in January, the cryptocurrency has failed to hold above the critical psychological level of $100,000, fueling growing concerns among investors.
Market participants are closely watching the $90,000 support level. Some analysts believe that if this level is breached, $BTC could drop to around $88,000, triggering a wave of long position liquidations. Crypto trader CrypNuevo notes that a retest of the lower range near $91,000 would significantly increase the chances of a decline toward $88,000. He points out that many long positions have stop-loss orders below that level, which could lead to a sharp downward move. However, he also suggests that a swift rebound could occur if buyers step in aggressively.
Using liquidation data from Hyblock Capital, CrypNuevo highlights two key zones that could act as price magnets in the near term. He argues that since current price action is near the lower boundary of the range, it may present a buying opportunity for long positions. Additionally, he identified $99,200 as a level where a large number of liquidations are likely to occur. However, before that happens, he cautions that $BTC could first dip toward $93,300, where another cluster of liquidations is concentrated.
Short Squeeze on the Horizon?
Prominent liquidation-focused analyst TheKingfisher believes that a short squeeze is the most probable outcome in the coming days, especially if #BTC trades below $96,000 at the start of the new trading week. His view is echoed by Mikybull Crypto, who relies on alternative liquidation data from CoinGlass. He notes that the current price consolidation is accompanied by liquidity building above the current range, making a sudden upward breakout increasingly likely.
Key Resistance at $102,500
Trader CJ identifies the $102,500 zone as the next significant resistance level. He argues that if Bitcoin can break through this level, there’s potential for further upside toward $105,000, as liquidity and buyer interest are clustered in that range. CJ sees the $102,500 – $105,000 range as a critical area that could determine Bitcoin’s next major move. A clean breakout could open the door to $125,000, though he doesn’t rule out a scenario where BTC first dips to $80,000 before starting a new uptrend.
Macro Factors to Watch
The upcoming week will also bring important macroeconomic developments. U.S. markets will have a shortened trading week due to Presidents’ Day on February 17. Key events include the release of unemployment claims data and the Federal Reserve’s January meeting minutes. Traders are keeping a close eye on the Fed’s policy stance, as recent inflation data has been stronger than anticipated. This has led investors to scale back expectations for interest rate cuts in 2024. According to CME Group, the probability of even a 0.25% rate cut at the March Fed meeting currently stands at just 2.5%.
Minutes from the latest Fed meeting are likely to confirm the central bank’s commitment to curbing inflation. Additionally, several senior Fed officials are scheduled to speak this week, which could add volatility to the market. The Kobeissi Letter, a leading market commentary service, points out that U.S. stock indices remain near all-time highs, despite rising unemployment and signs of slowing economic growth. In particular, jobless claims in Washington state have surged by 55% over the past six weeks, surpassing levels seen during the 2008 financial crisis. However, this development has not yet had a noticeable impact on the cryptocurrency market.
Bearish Signals Emerging?
Some analysts are warning that Bitcoin could be entering a “bearish phase.”
A key indicator, the Inter-Exchange Flow Pulse (IFP), which tracks BTC flows between spot and derivatives exchanges, suggests that bearish sentiment may be growing. J.A. Maartunn, an analyst at CryptoQuant, explains that large #BTC inflows to derivatives exchanges typically signal a rise in long interest. Conversely, when BTC moves from derivatives platforms to spot exchanges, it can indicate bearish sentiment. Historically, Bitcoin’s price peaks have coincided with sharp increases in the IFP. However, this spike has been absent in the current cycle, suggesting that whale demand may be weakening.
Positive Signals Still Present
Despite these concerns, other CryptoQuant data suggests that the broader outlook remains positive. Darkfost, another analyst, points out that demand for BTC remains strong, even as the price consolidates between $90,000 – $105,000. He highlights the ratio of BTC inflows and outflows on exchanges, particularly its 30-day moving average, which continues to signal buying demand. This pattern, he notes, has historically marked the start of bull runs. Darkfost adds that exchange outflows could indicate accumulation, though he acknowledges that some of these movements may reflect internal transfers by centralized exchanges and institutional players.
Long-Term Holders Show “Euphoria”
Analysts are also watching the Net Unrealized Profit/Loss (NUPL) metric for long-term BTC holders. This indicator measures unrealized profits and losses among investors holding BTC for over six months.
Over the past month, NUPL has remained in the “euphoria zone,” a level that has historically preceded local price tops. In previous market cycles, this phase has lasted between 228 and 450 days. The indicator remains in a critical range, suggesting that BTC could stay overbought for several months before any meaningful correction occurs.
What’s Next for Bitcoin?
The coming days could prove decisive for BTC. If a short squeeze scenario plays out, the price could briefly drop toward $88,000 – $80,000 before reversing. However, the possibility of a breakout toward $125,000 remains firmly on the table, should Bitcoin reclaim and hold key resistance levels.
