The cryptocurrency markets are currently experiencing heightened tension, but the chart for Bitcoin (BTC) reveals a strategic narrative that belies the sensational headlines. Following a failed attempt to breach the $94.5K resistance, BTC has seen a pullback, and recent analysis of the 3-day heatmap highlights significant long liquidity accumulation between $89K and $87K. Such dense liquidity clusters often serve as gravitational pulls for price movements, particularly when institutional investors are targeting over-leveraged positions.
The ongoing pullback aligns with this trend, as the price drifts toward previously untouched liquidity pools that are essential in determining the next directional shift. The question now is whether Bitcoin will dip to sweep the liquidity between $89K and $87K. The recent downturn towards $90K corresponds with liquidity levels established earlier in the week, with a deeper concentration still evident between $87K and $86.3K. This liquidity zone has remained untested since early December, making it a likely target if BTC fails to sustain its current levels.
A sweep into this liquidity pocket could potentially eliminate over-leveraged long positions before any serious rebound attempt occurs. Should BTC fall below this area, it would likely descend towards the $86,320 mark, with a further liquidity shelf positioned around $80,507 that could act as a final downside magnet.
The ability of the price to defend or penetrate the $89K to $87K block will be pivotal in determining whether BTC can rebound towards $96K or if it will slip into a more pronounced breakdown.
Currently, Bitcoin is caught within two overlapping bullish patterns: a minor ascending triangle that signifies short-term price compression, and a major ascending trendline that has provided support for rebounds since November. The price has accurately tapped the lower boundary of the minor triangle, while the relative strength index (RSI) has illustrated a distinct bullish divergence, indicating a potential loss of downside momentum even as the price reaches marginal new lows. This combination typically signals the possibility of sharp rebounds if structural support is maintained.
However, the risk remains clear. A breakdown from the minor structure would expose the major ascending trendline, and maintaining this line is crucial to preserving a bullish trajectory. Losing this support could open the door to broader liquidity zones between $86K and $80.5K, which have historically functioned to reset leveraged markets and clear out weaker long positions.
Farzam Ehsani, CEO of VALR, emphasized this point in a recent communication, noting the intersection of macroeconomic sentiment and technical analysis at a critical juncture. The Federal Reserve”s recent 25 basis point cut temporarily lifted BTC to $94.5K before sellers stepped in, a pattern reminiscent of previous cut cycles where initial optimism quickly waned. Chairman Powell”s comments hinted at sustained Treasury purchases, suggesting a form of quantitative easing support, while also cautioning about rising employment risks and inflation driven by tariffs.
Despite nine of twelve members of the Federal Open Market Committee supporting the rate cut, market reactions were cautious rather than overtly dovish, leading to Bitcoin“s subsequent pullback. Ehsani noted that this macro response coincides with Bitcoin“s technical landscape at a crucial time.
Looking ahead, analysts from CryptoQuant have reported a noticeable decrease in selling pressure. Exchange deposits have plummeted from 88K in late November to just 21K today. Additionally, whale deposits have dropped from 47% to 21%, and the average deposit size has decreased from 1.1 BTC to 0.7 BTC, indicating that large sellers have retreated.
Ray Youssef, CEO of NoOnes, echoed this sentiment, suggesting that the current environment often sets the stage for relief rallies. The $99K mark stands as the first major resistance level, aligning with the lower band of the Trader Realized Price. Beyond that, $102K and $112K emerge as subsequent resistance levels. If Bitcoin manages to avoid deeper liquidity sweeps and maintains its ascending structure, a movement towards $96K remains plausible.
In conclusion, the coming days will be critical for Bitcoin as it tests these liquidity zones, with potential implications for its short-term price trajectory.
