The current market situation is explained by trader Ilya Meshcheryakov.
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Last week proved highly volatile for the market. Bitcoin price reached $11,170 and began to fall rapidly, trading around $10,500 at the time of writing.
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The move from $10 000 to $11 200 should be viewed as a squeeze on short positions. At present, most of the sellers’ open interest has already been liquidated or exited on stop orders, while the market is being pressured by a waning appetite for risk assets.
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Comparison of BTC and NASDAQ index charts since September this year, BTC levels and accumulation zones are marked. Hourly BTC/USDT and NDX charts from TradingView.
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Global stock indices continue to hit new lows, with roughly two to three disappointing sessions for every market-friendly one, and the bulls have little strength. Nevertheless, BTC managed to gain around 10% over a few days, and is now unwinding its overbought conditions.
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The long-term trajectory remains bearish, evidenced not only by capital outflows from risky assets, but also by a narrow breadth of the market (only a small number of coins are rising, while BTC’s dominance is increasing). With high probability, BTC could print new lows for this month and dip below $9,800. Intermediate targets for the downside are $10,220 and $10,000.
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The medium-term picture looks notably better: as a result of yesterday’s unabated drop, a large number of open-short positions without hedging have built up, including those with small to medium stop losses. Below in the chart I highlight the likely zone for their consolidation in red. Support is also provided by indices that rebound from yesterday’s fall (about 3%).
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BTC chart with the likely liquidation zone and the short open-interest stop-loss (in red). The fifteen-minute BTC/USDT chart from TradingView.
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In the short term BTC may linger in the current sideways range with boundaries at $10,350 and $10,530, which could provide good intraday trading ideas. The intermediate level in the range is $10,461.
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The most probable development is a temporary consolidation within a local range, after which BTC will draw in short-position open interest up to $10,700–$10,800. Long-term, the market remains bearish, though it depends on many factors.
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