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Bitcoin is rebounding after a rejection north of critical resistance around $20,000 and may be gearing up for another move towards its ultimate support level. The crypto saw some gains earlier this week, but any bullish momentum has been wiped out by macroeconomic forces.
At the time of writing, Bitcoin (BTC) is trading at $19,600 with a 2% loss in the past 24 hours and sideways movements throughout the week. The rest of the crypto market follows crypto market sentiment, proving once again that any potential rally is limited by the bigger picture.
Bitcoin takes out leverage, time for a squeeze?
According to analyst Justin Bennett, Bitcoin made a downward move towards $19,600 and a little lower to remove leveraged players from their positions. The cryptocurrency often moves in the opposite direction to the majority of traders and makes a run for the liquidity pools created by over-leveraged positions.
In this case, retailers would have jumped into this week’s bullish price action by going long in hopes of further appreciation. Bennett believes that with these players out of the way, the market may be getting ready for a jump:
BTC long liquidations are running at $19,600, as reported yesterday in Discord. Now probably time for a jump back to $20,500. Just trade both sides of the range for now.
Overall, Bennett has been optimistic about Bitcoin and will remain biased as long as the price of BTC remains above $18,700. This price is the bottom of a potential channel created by the cryptocurrency in recent months.
The recent price action hinted at a longer auxiliary rally in the $26,000 area. In the short term, with leveraged longs out of the game, it may be time to squeeze the shorts out. the analyst added:
I still think it’s only a matter of time before we see short liquidations running between $20,450 and $20,800. Now only play the range.
Macro Forces Push Crypto Market Down
What caused Bitcoin to crash from its weekly high? A pseudonymous trader thinks it was the recent data on the number of jobs in the US economy. This report could support the US Federal Reserve to continue raising interest rates to reduce inflation and risk assets as a result.
As reported by NewsBTC, the Fed’s monetary policy has been expensive for stocks and the crypto market is moving along with these assets. Now the Job numbers tell the financial institution it can continue to put pressure on the markets.
However, this trader believes that the recent price action has switched back to sideways mode and Bitcoin can avoid any catastrophic downward price action for now. Via Twitter, this trader said:
This puts us back in the middle of the perennial 18.5-20.5K region and this puts us quite a way out of any breakout be it up or down. Unless something special happens, I’d say it’s likely we’ll stay in this area until at least the CPI number next Wednesday.