Main Highlights:
Bitcoin approaches the $120,000 threshold as traders increase liquidity around the current spot price.
Market analysis suggests bulls are addressing the “imbalance” to push prices higher.
Long-term bearish divergences continue to create uncertainty regarding the Bitcoin bull market’s sustainability.
Bitcoin (BTC) held above the $120,000 support level as Wall Street opened on Friday, with analysts anticipating a new short squeeze.
Traders Targeting $123,000 in BTC Liquidity
Data from Cointelegraph Markets Pro and TradingView revealed a reduction in short-term BTC price volatility for the day.
BTC/USD set new local highs as the daily close approached, with a key level now identified at $121,100.
Commenting on market conditions, well-known trader CrypNuevo identified the overhead liquidity as a probable next target.
“Liquidations at $120k have occurred,” he noted in his latest analysis on X.
“Now we find ourselves in this Liquidity Pool (LP) indicating an imbalance that requires a full retracement ($123.2k).”
Data from CoinGlass also indicated significant bids accumulating around $118,500, which could serve as support during a market correction.
Regarding a possible retracement, trader BitBull indicated this might be prompted by a rise in open interest (OI) in derivatives markets.
“In the upcoming 1-2 weeks, BTC and altcoins are likely to experience a significant leveraged sell-off,” he forecasted in an X post.
“This will compel many to sell their holdings under the impression that Uptober has concluded. Subsequently, Bitcoin and altcoins will rebound and reach new peaks.”
CoinGlass reported total futures OI across exchanges surged to a record $88.7 billion today.
Bearish Divergences Raise Alarm
Another indication of potential trouble came from trader Roman, who pointed out bearish relative strength index (RSI) divergences observed on daily and weekly timeframes.
Related: What gap at $110K? Bitcoin futures show ‘aggressive long’ positioning as whales return
A bearish divergence is identified when the RSI shows lower highs while the price records higher highs—this is currently evident around Bitcoin’s peak of $124,500.
“How long can $BTC disregard these bearish divergences and the lack of momentum on the 1W and 1M timeframes?” Roman questioned on Tuesday.
“Volume also indicates a deficiency in strength. It’s only a matter of time before these play out. Exercise caution in your holdings.”
As reported by Cointelegraph, the four-hour RSI remains in “overbought” territory, further supporting predictions for price cooling at lower timeframes.
This article does not constitute investment advice or recommendations. All investments and trading carry risks, and readers should conduct their own research before making decisions.
