Last week, Bitcoin suffered another correction wave, with the price falling to around $88,000 as the cryptocurrency market continued to face weak investor appetite. While the top cryptocurrency has felt some relief, the approaching monthly close indicates that the market is at a critical juncture that could define the price direction for February.
Bitcoin market values rebalancing or complete collapse
Bitcoin is headed for an important monthly close next week as recent price movements suggest the market is approaching an inflection point, according to seasoned analyst KillaXBT. Notably, BTC, which swept to external highs near $94,600 earlier this month, has since faced a firm rejection, with its price recently falling to the lower end of the $88,000-$90,000 range.
This rejection of the top has resulted in a pronounced cap on higher periods, a structure that often indicates aggressive selling pressure. However, KillaXBT explains that these wicks are often partially or fully reverted due to liquidity. With a full trading week still remaining until the close of the monthly candle, market analysts assume there are three main scenarios that could determine price direction in February.
First, Bitcoin could rise towards the end of the month, resulting in a stronger monthly close. Under this scenario, February could start with the price forming the upper part of the current week, potentially revisiting the mid-low $90,000s before rolling over to the $83,800 region later in the month.
In the second scenario, Bitcoin would close the month near its current level of $89,000 and resume its downward trend after hunting liquidity in the $91,000-$92,000 range in early February. Interestingly, both scenarios are consistent with the idea that markets may first rise to rebalance liquidity before resolving liquidity declines.
The third scenario presents more serious consequences from a potential market crash. In this case, KillaXBT predicts that Bitcoin could return below its weekly and monthly opening price of $87,664 and close below this level before February. The analyst describes this scenario as “severely bearish.” This is because it increases the chances of a quick move towards lower support in the new month.
In particular, KillaXBT favors the first two scenarios. This is because the current sentiment is very bearish, meaning most investors do not expect a move higher. However, the analyst emphasized that a loss of $83,800 support under any scenario would significantly change the outlook for the remaining long-term exposure.
Bitcoin Price Overview
At press time, Bitcoin is trading at $89,645 after rising slightly 1.4% over the past day.
Featured image from Flickr, chart from Tradingview
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