January 31 was marked by jittery price action that caused Bitcoin (BTC) to trade bullish gains for bearishness.
Liquidated $46 million in long positions
Data from Cointelegraph Markets Pro and TradingView showed a less bullish BTC/USDreporting that the pair fell to just over $22,500 on Bitstamp overnight.
After that, the pair broke above $23,000 as short-term resistance and, as of this writing, is still below that level.
With the month close just hours away, the stakes remain high for both long and short traders. The close of the month will be followed by interest rate decisions by the US Federal Reserve on 1 February and by the European Central Bank (ECB) the following day.
Pending the volatility, liquidations have increased despite Bitcoin maintaining a rather tight trading range.
On January 30, the move to $22,500 caused $46 million in long liquidationswhich is the highest daily total of 2023 according to data from Coinglass.
Additional data from Material Indicators, an on-chain analytical resource, highlighted the tense situation on the Binance order book.
Supply and demand liquidity has been kept in flux, with incremental up and down shifts having a tangible impact on the BTC price trajectory. Supply just below $22,000 and demand at $24,000 kept BTC/USD in check.
“It is worth pointing out that this is the same block of offers that has been pushing the BTC price for weeks, and as it is prone to move, it could end up rallying”commented Material Indicators in un thread su Twitter on January 30.
Also, according to the analyzes, the position of liquidity “it’s not a coincidence”indicating Bitcoin’s old all-time high of 2017 as “last support zone” in case current levels fail to hold.
Crypto traders stem the influx of “liquidity”
As the week opened on Wall Street, the catalysts for a decline in Bitcoin and altcoins had already multiplied.
Related: Best January since 2013? 5 things to know about Bitcoin this week
On January 30, US stocks lost ground, due to market nervousness about the Fed, which manifested itself in a decrease in risk appetite.
This phenomenon has also been evident in crypto exchanges, as stablecoin deposits have shrunkdecreasing what one analyst has defined “dry powder” (liquidity) available for investments in cryptoassets.
“Right now there is a negative correlation between stablecoin price and deposits. Of course this is not the only indicator we need to watch but the Fed meeting will be held later this week and we too see this negative correlation”summed up Kripto Mevsimi, a contributor to the on-chain analytics platform CryptoQuant.
“We can expect high volatility this week, but we have to be cautious as there is not much liquidity flowing into exchanges anymore.”
An accompanying chart showed a divergence in stablecoin deposits versus BTC/USD growth in the second half of January.
The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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