Bitcoin (BTC) is about to kick off a new week, and there’s a lot of buzz surrounding a possible breakout from its tight trading range of roughly $103,000.
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The price action seems to be gathering momentum before perhaps retracing back to its initial position, which may leave many emotional traders in the dust. Is it real or just a taste of something larger?
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Regardless, closures on May 18th demonstrated that Bitcoin reached new all-time highs.
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This week, trades in the US are anticipated to be a significant source of macroeconomic volatility.
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The relationship between cryptocurrency and traditional stocks presents a complex picture, creating uncertainty regarding how macro developments will influence Bitcoin and altcoins moving forward.
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Analyzing Bitcoin Exchange volume Delta is crucial for understanding the sustainability of any price breakouts, with insights derived from Cryptoquant.
Classic Moves
Bitcoin’s recent price action is reminiscent of movements seen around May 18th.
Following a leap to a new monthly high of nearly $107,000, there was a 4% correction in just a few hours, as displayed by Cointelegraph Markets Pro data and TradingView.
In this timeframe, spikes encountered a fluid resistance level amidst the all-time highs, with BTC/USD seemingly executing a “liquidity glove” strategy designed to clear out short positions first, followed by trapping slower longs.
“Classic liquidity traps and downward reversals above recent highs,” crypto trader and analyst Michael Van de Poppe noted.
“I think we could see the same pattern for $100,000 before ultimately breaking out. Those are the zones to accumulate Bitcoin.”
Data from monitoring platforms like Coinglass indicated liquidity at around $107,500 was preventing prices from climbing higher, subsequently pulling bids down to $102,000.
In the 24 hours prior to this writing, the total liquidation amount reached $673 million.
While discussing Bitcoin’s outlook, trader Crypnuevo emphasized the importance of caution rather than jumping into trades within the current price range above $100,000.
“From a risk management standpoint, going long at current market prices isn’t ideal,” he commented before the weekly close volatility.
“Sure, prices might increase as suggested by higher timeframe trends, but as a trader, I’m really looking for a lower-risk entry. Right now, we’re facing resistance.”
Crypnuevo pointed out that strong bullish signals persist in higher timeframes, especially noting a retest of the 50-week index moving average (EMA) in April.
This weekend, another prediction forecasted Bitcoin might hit $116,000 shortly.
Record Week for Bitcoin
Though it may have been brief, Bitcoin’s recent weekly closures marked its highest recorded levels.
Closing around $106,500, that weekly candle created a fresh daily deadline.
Despite a subsequent nearly 4% correction, traders are eager to celebrate what they perceive as an underlying demand for higher prices.
“This week has ended up being Bitcoin’s best week.”
Trader Gerre commented that this week could conclude on a positive note despite starting off in the red.
Other traders have also noted that BTC/USD managed to close above a significant Fibonacci expansion level for two successive weeks.
Private Wealth Manager SwissBlock Technologies identified a vital factor contributing to the ongoing bullish sentiment.
“Bitcoin flirted with the $107,000 mark and drew liquidity from $104,000 to $106,000, yet couldn’t maintain that level,” they summarized.
“For now, support is holding as we revert to the range. Bulls have one task — maintaining this range.”
Recent data from Coinglass shows that May has been quite volatile for BTC, with current profits sitting at around 10% while also showcasing a range of historic results as the month nears its end.
US Trade Tensions Amid Bitcoin’s Resilience
This week lacks significant macroeconomic data, drawing attention to the Federal Reserve and US trade dynamics.
In particular, markets are eyeing potential positive shifts in trade relations with the US’s global partners. Treasury Secretary Scott Bescent has stated intentions to introduce new tariffs on countries that don’t negotiate in good faith.
Recent news regarding contracts with China generated a swift uptick in stocks, offering traders a sense of assurance.
However, this may shift as the week opens, especially following Moody’s recent credit downgrade of the US.
With the dollar under renewed pressure, some suggest that Bitcoin and altcoins could still thrive in this environment.
“Crypto benefits from Moody’s downgrade. Bitcoin is just 4% off its all-time high, surging over 40% since its April low.”
As the US dollar softens and uncertainty rises, both Bitcoin and Gold appear to thrive; instability seems to favor them the most.
Moreover, crypto has shown increasing resilience to the Fed’s hawkish cues.
CME Group’s FedWatch Tool indicates only a 12% probability of a rate cut in June’s upcoming meeting. The unemployment claims set for May 22 could alter these predictions if the results diverge significantly from expectations.
Fed Chair Jerome Powell is scheduled to speak on May 25th, but it’s unlikely to yield substantial policy insights.
Correlation Conversations
The varied responses to Moody’s downgrades sparked discussions regarding the correlation between crypto and US equities.
In their recent assessments, research firm Santiment found it challenging to clearly define the relationship between the two asset classes, labeling them as “somewhat correlated.”
The market is still assessed to be within the furthest distance collectively on record as the 90-day tariffs were suspended between the US and China.
Individual insights from blockchain data provider Redstone Oracles highlighted differences between both long-term and short-term correlations.
While the short-term perspective showed negativity, the 30-day outlook indicated a “valuable correlation” between Bitcoin and the S&P 500.
Market participants are expressing frustration at crypto’s sensitivity to volatility factors that affect traditional stocks.
“When Bitcoin traded independently of stocks, it was significantly more enjoyable,” commented Incomesharks.
Volume Delta Signals a Potential Market Top
Given the current needs for Bitcoin to re-enter price discovery, new analyses focused on the dynamics within Exchange Order-Books.
Specifically, Binance was examined due to its substantial spot volume. Volume delta plays a crucial role in assessing sustainable price movements, according to Onchain Analytics platform Cryptoquant.
“Following a recent market correction, Binance’s Spot Net Volume Delta has reverted to positive territory,” noted Darkfost.
“This demonstrates that purchasing activities are recovering, but sales pressures are decreasing significantly, even with BTC trading above $100,000. Historically, however, rapid increases in spot volumes on Binance have often signaled market tops.”
Volume Delta gauges the balance between buying and selling throughout a trading period, helping to assess the strength of market demand and supply.
Cryptoquant advises closely monitoring these dynamics around breakouts to avoid unsustainable price surges and unfavorable market entries.
“Increasing spot volume is not necessarily a warning sign; rather, it can indicate market strength,” Darkfost added.
Tracking volume offers valuable insights into investor behavior, especially among Binance users who contribute significantly to global trading.
This article does not include investment advice or recommendations. All investment and trading activities carry risks, and readers should conduct their due diligence before making any decisions.
