Crypto Setting Up For Squeeze, Will BTC Price Get In The Way?

Crypto News
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Bitcoin shows weakness as BTC price trades within a tight bandwidth, the number one cryptocurrency by market capitalization saw a small surge in volatility during today’s trading session. However, price action was stifled by the poor performance of traditional stocks.

At the time of writing, BTC price is trading at $19.00 with a 4% loss in the past 24 hours and a 3% loss in the past week. As Bitcoin trends move lower in support, the momentum indicator follows, suggesting there is little conviction to resume bullish momentum.

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BTC’s Price Trends Lower on the 4-Hour Chart, Heading for Annual Lows? Source: BTCUSDT trading overview

In the next two weeks, the crypto market will pass an important milestone with Ethereum’s “Merge”. The second cryptocurrency by market cap will complete the transition to a Proof-of-Stake (PoS) consensus. As a result, the ETH price outperformed the BTC price.

“The Merge” Is Scheduled For Mainnet Deployment September 13the up to 15e, this event will undoubtedly bring volatility to the market. Today, the core developers of Ethereum announced the successful implementation of the “Bellatrix” update.

A few hours later, BTC price broke below a critical support zone and trendline created since August’s bullish price action. Data from Material Indicators shows that liquidity in the order book for crypto exchange Binance is getting thick.

As the price of Bitcoin trends declined, liquidity followed and is near the cryptocurrency’s annual lows between $17,600 and $18,000. In the meantime, all investor classes have sold out in the price action, from retail to large investors.

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BTC price (blue line on the chart) moving towards downside liquidity in the short term. Source: Material Indicators

If today is any indication of what traders can expect from “The Merge”, and bulls can support the current levels of BTC price, the cryptocurrency could take another step down in the pool of bids shown in the chart above. . The next critical support levels are $17,000 and $16,000.

For a deeper dive into “The Merge” and its potential implications for Ethereum’s price, check out our Editorial Director Tony Spilotro’s analysis.

Institutions Go Short, BTC Price Doom To Retest Annual Lows?

The second major catalyst for the crypto market will take place during “The Merge”, the US will publish its most recent Consumer Price Index (CPI) which will provide more clues about inflation in the country. As NewsBTC has reported, the US Federal Reserve (Fed) has been aggressively trying to control inflation by raising interest rates.

As a result, the risk-on markets are trending downward. If the September 12e CPI print maintains its downward trend in July, the Fed could point to some monetary policy easing. This could allow BTC price and other cryptocurrencies to regain their bullish momentum.

In a recent report, trading desk QCP Capital noted a reduction in long positions (blue line in the chart below) by institutions as they increase their short positions (purple line below). This indicates what these entities expect in the short term. The trading desk said:

The showdown between macroeconomic conditions and market positioning will come as early as September and will determine whether bearish macro forces work out as the market hopes, or whether we are gearing up for a squeeze of historic proportions.

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Settings are going short as shown by the purple line below. Source: QCP Capital

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