Bitcoin [BTC] has managed to break the round number resistance at $90,000 after three weeks of sideways price action between the $85,000 and $90,000 region.
The declining whale balance was a warning sign that the rally could face setbacks and delays.
In a post on
Analysis of the expected Bitcoin liquidity run
A liquidity run is an initial false price move designed to trap breakout traders, the bank explains analyst. In this scenario, a breakout past the local resistance at $94.5k would convince the bulls that the breakout was coming.
The liquidation levels of the new long positions can then be hunted with a low below $84,000. After that, the real momentum move to $100,000 and higher can begin.
At the same time, the analyst warned that it is possible that resistance at the $92k of the 50-day EMA could reject Bitcoin.
In this scenario, the liquidity surge to $96,000 may not happen, and instead BTC could head straight towards $80,600 in the coming days.
AMBCrypto had recently noted that a move towards $94k-$96k was likely this month, but also warned of bearish ETF flows in the second half of December, leaving traders with a dilemma.
The similarities with Ethereum
Interestingly enough, Ethereum [ETH] could also see a similar result on the price charts. While the leading altcoin tends to follow Bitcoin, the liquidation heatmap outlined what swing traders can expect in January.
Ethereum has also gathered liquidity at $3,200 and still has a strong magnetic zone at $3,500. It also has an attractive liquidity cluster of $2,700-$2,800.
A series of these lows could serve as a launching pad for the next ETH rally.
This meant that Bitcoin and Ethereum traders who are not yet in long positions had to be patient. Those with short-term gains could use a momentum shift in a lower time frame to take profits.
A BTC breakout past $94.5k is not an automatic signal to go long, and traders should be wary of the possibility of a liquidity run.
Final thoughts
- A rise above the $96k level and a subsequent reversal below $94k could be a warning signal that Bitcoin could fall towards $84k and $80.6k.
- Ethereum’s liquidation levels also showed similarities to Bitcoin’s, and a price drop to $2,800 was a possibility.