Bitcoin Bulls Hold The Line At $20,700, But Bigger Losses Are Imminent?

Bitcoin mislaid steam the erstwhile time and seems poised to re-test its enactment levels successful the coming days. The cryptocurrency rallied connected the backmost of favorable macroeconomic winds and precocious upside liquidity from overleveraged abbreviated traders. 

As of this writing, Bitcoin trades astatine $20,800 with a 3% nonaccomplishment successful the past 24 hours. BTC remained affirmative during the erstwhile 7 days and recorded a 16% profit. The fig 1 crypto by marketplace capitalization is the champion performer successful the apical 10. 

BTC’s terms trends to the upside connected the regular chart. Source: BTCUSDT Tradingview

The Biggest Obstacle For Bitcoin In The Short Term

NewsBTC reported that abbreviated positions were piling up arsenic Bitcoin trended to the upside. The marketplace took retired implicit fractional a cardinal dollars successful abbreviated positions. As the marketplace trended upside, these positions were liquidated, allowing BTC to proceed climbing. 

In that sense, Bitcoin mightiness support trending upwards but astatine a slower pace. As the marketplace ate disconnected those shorts during the past week, over-confident agelong positions mightiness go the target. This displacement mightiness propulsion BTC backmost to the captious supports astatine $19,600 to $19,700. 

BTC liquidation levels. Source: Loner via Twitter

These levels person confluence with the 200-Day Simple Moving Average (SMA) and 50x leverage longs. Thus, determination is simply a precocious liquidity excavation sitting astatine those levels, acceptable to beryllium taken by marketplace movers. 

On higher timeframes, a caller report from QCP Capital claims the macroeconomic winds mightiness alteration and could negatively interaction crypto. 2023 kicked disconnected with a affirmative outlook connected captious metrics, specified arsenic inflation, and precocious expectations of a monetary pivot by the U.S. Federal Reserve.

The fiscal instauration has been hiking involvement rates and unloading its equilibrium expanse to combat inflation. This metric has been astatine its highest level successful the past 40 decades. 

Markets Will Take A “Rude Shock?”

Recent information shows ostentation is declining; this inclination mightiness enactment the Fed’s slowdown connected its monetary argumentation and supply country for Bitcoin and hazard connected assets to rally. However, QCP Capital believes that portion Q1, 2023 mightiness beryllium affirmative for these assets, Q2 could spot immoderate hurdles: 

While we expect the 1 February FOMC to propulsion backmost powerfully against this pricing, we judge the 22 March FOMC volition beryllium the infinitesimal of truth, erstwhile updated complaint forecasts volition beryllium released. Should determination beryllium nary accommodation to the median 2023 dot, past we expect markets volition beryllium successful for a rude shock.

The information that Bitcoin and immoderate stocks person been rallying is grounds of “how rapidly fiscal conditions person loosened,” the steadfast believes. The Fed has been warring against this economical environment, truthful its instrumentality could propulsion the fiscal instauration to tighten its monetary policy. 

Interest complaint hike expectations are declining arsenic the marketplace approaches 2024. Source: QCP Capital

For this clip adjacent year, the marketplace is expecting overmuch little involvement rates, arsenic seen successful the illustration above. It remains to beryllium seen if the Fed volition indulge these expectations oregon if ostentation volition persist, starring to much symptom crossed the crypto and the bequest fiscal market.