Bitcoin has climbed back above the $94,000 mark, reigniting discussions about the potential resurgence of a bull market for the cryptocurrency. This upward movement comes despite concerns regarding BTC volume metrics, which suggest a lack of robust buying momentum that could sustain the price increase.
In the latest market developments, Bitcoin bulls seem to have regained control of the short-term trend, pushing prices beyond the crucial $94,000 threshold. However, liquidity indicators have raised some caution flags. Even as prices surged, the bid-ask liquidity has remained relatively subdued, hinting that while buyers are entering the market, their numbers may not yet be enough to drive a more sustained rally.
Bitcoin had previously struggled to hold above the 93,000level,especiallyafteraninitialbreakoutonDecember3thatgeneratedasenseofindecisionamongtraders.WiththeFederalOpenMarketCommittee(FOMC)meetingapproaching,manyparticipantsadoptedawait−and−seeapproach,leadingtoseveraldaysofstagnantpriceaction.ThisscenarioshiftedonTuesdaywhenBitcoinbrokethroughthe93,500 barrier, creating the necessary momentum to establish a higher price point and restore bullish sentiment.
Analyzing the four-hour price chart, Bitcoin has effectively covered the fair value gap that existed between 87,500and90,000, but it had not produced a follow-up impulse necessary for higher price levels. The recent breakout signals a renewed strength in the market, even amid ongoing macroeconomic uncertainties. If Bitcoin can maintain its position above the monthly volume-weighted average price (VWAP) after the FOMC meeting, it could bolster the case for a trend reversal backed by strong momentum.
Market observers, including trader Jelle, noted the recent periods of flat trading, suggesting a cautious outlook. He pointed out that traders should be vigilant for any declines below the 87,600markoradecisivemovementabovethe93,000 level.
Despite the recent price rally, concerns remain over liquidity. The bid-ask ratio for Bitcoin has been low and has not shown the consistent confidence typical of strong bullish trends. Following a significant drop from 100,000to80,000 in November, the ratio turned positive as substantial bids absorbed the selling pressure. However, the current rebound does not reflect the same aggressive bidding activity, indicating that the price increases are more sentiment-driven, with real demand not catching up yet.
In addition, Bitcoin’s pricing premium has revealed a mixed bag. The Korea Premium Index, which tracks retail investor sentiment, has significantly decreased, suggesting that local markets have cooled and are now trading closer to neutral or negative premiums. This indicates that retail investors are not aggressively chasing the current price movements. Conversely, the Coinbase Premium Index, which serves as a barometer for U.S. investors, has regained positive readings, historically indicating spot market accumulation during early trend reversals.
Bitcoin bia-ask ratio and liquidation data analysis. Source: Hyblock
Overall, while Bitcoin has demonstrated notable price strength, the underlying liquidity concerns and the mixed sentiment among retail and institutional investors suggest a cautious approach as the market grapples with macroeconomic pressures and impending decisions from the FOMC. Traders are left to navigate this delicate balance, weighing potential opportunities against the risks of volatility that could arise in the wake of significant economic announcements.
Source: Cointelegraph Edited by Sonarx