Bitcoin’s value increased by 3% following a series of declines that began at the end of January. The leading cryptocurrency managed to recover above $80,000 after a temporary dip below that level on March 11.
Bitcoin weekly chart.
Following the release of the US core Consumer Price Index (CPI), which was lower than anticipated at 3.1% on March 12, Bitcoin’s market dynamics now suggest a potential for a swift bullish reversal.
Bitcoin liquidity clusters between $84K and $85K
After a price drop on March 9, Bitcoin (BTC) made several attempts to test the resistance zone between $84,000 and $85,000, leading traders to significantly increase their short positions in that area.
Data from the liquidation heatmap indicated over $300 million in short positions accumulated at this price level, which would face liquidation if Bitcoin exceeds the $85,000 barrier.
Bitcoin 1-week liquidation heatmap.
With limited downside liquidity beneath $77,000, the likelihood of BTC climbing toward upward liquidity has increased. Additionally, triggering liquidations above $85,000 could create added bullish momentum, enabling Bitcoin to establish a higher peak and transition this level into new support.
A CME Bitcoin futures gap from the previous weekend remains unfilled between $85,000 and $86,000. Having historically filled all six gaps in the last four months, this scenario further raises the odds of converting the overhead resistance into support at $85,000.
Bitcoin 4-hour chart.
Should this materialize, the next significant barrier appears at $90,000, which could lead to the liquidation of over $1.6 billion in short positions, paving the way for a retest of the $95,000 level, representing a 12% increase from the current price.
Related: Bitcoin needs to close above $89K weekly to confirm the bottom has been reached
A Bitcoin analyst expressed a similarly cautious outlook but noted that the price continues to move “correctively,” suggesting potential sideways movement prior to a short squeeze.
Conversely, another crypto analyst pointed out that BTC appears to be showing signs of distribution near the $85,000 range, indicating short-term bearish sentiment. The trader emphasized that the BTC price may dip below $80,000 before any bullish breakout takes place.
Order book trends diverge between exchanges
Spot traders on one leading exchange have been aggressively offloading Bitcoin recently, with data indicating selling pressure peaked at the local lows around $76,650.
In contrast, buyers on another leading exchange placed bids at these levels, contributing to Bitcoin’s recovery above $80,000.
Order book analysis of exchanges.
A similar trend presented itself on March 12, with sellers on one exchange active near the $85,000 resistance, while buyers on the other exchange defended the price at $81,000 during the early US trading hours, helping prevent further declines.
Related: Declining crypto trading volume signals market exhaustion: Analysis
Although one exchange has historically propelled BTC’s rallies, the conflicting actions between the two major exchanges may hinder Bitcoin’s ability to swiftly navigate through resistance levels.
To reclaim higher peaks at $85,000, $90,000, and $95,000 over the coming weeks, there may need to be more unified trading activity across these two platforms.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should perform their own research before proceeding.