Market Wrap: Bitcoin Price Slumps Despite Positive Market Sentiment | CPT PPP Coverage

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Bitcoin price has been on the rocks for the past week, despite more firms applying for the Bitcoin spot ETF. Market sentiment was and is still bullish but the price seems to be going down.

Let’s dive into Bitcoin price this week.

Previous  Bitcoin Price Analysis

Last week, Deribit’s Bitcoin options aggregate open interest for June 30 showed that Bitcoin would be having an easy time on its way to $41,000. Consequently, we predicted that Bitcoin might have an eventful week beginning in July. However, throughout the week, Bitcoin has been on a consolidation trend.

Consolidation trends are usually artificially created by market makers (MMs) to snatch liquidity from retail traders before the real move upwards (or downwards) happens.

From the chart above, the Buy Side Liquidity (BSL) Hunt shows areas where Shorts were liquidated, but the MMs had not had their fill. The liquidity hunt has been going on for the past two weeks. 

A quick scan on Coinglass shows that over the two weeks, $616.89 million worth of Shorts has been liquidated across eight of the largest crypto exchanges. Comparing the BSL hunt with the Sell Side Liquidity (SSL) hunt, we can see that MMs have only hunted a small portion of the SSL.

This information is an indicator of what is to come. Then, there are two possible outcomes:

Theory 1: Bearish

If the MMs (AKA the smart money) are taking out the BSL, it means that they may be planning to dump the price of Bitcoin, and cannot allow the Short sellers to benefit from the imminent crash. 

This theory is further fuelled by the significantly low amount of SSL hunts seen on the chart. When they decide to push the price down, they will clear the sell stops for the Long-biased traders. 

Theory 2: Bullish

It may be a false move to trick the traders. Traders analyze charts in the same way. Most traders are probably thinking the BSL is a psychological resistance. Most of them have been analyzing the price action and can see the aggressive liquidity hunting that is ongoing.
In their mind, they are thinking Theory 1 is in play.

But actually, what the MMs are planning is to push the price up. By tricking traders that they are planning to dump the price (by clearing BSL and triggering), they cause many traders to enter long positions. 

What then transpires over the next days is an aggressive move to the downside that takes out all SSL and liquidates the long-biased traders with open positions. The move also triggers any Buy Limit orders of the Long-biased traders. Shortly after, the MMs change the trend aggressively and push the price up.

Only the last batch of traders who had set their Buy Limit orders at the SSL and patiently waited will be in profit.

DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make investment decisions based solely on what you read here.

Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.