Trader Ilya Meshcheryakov explains the current market situation.
Sunday, February 14, proved to be a difficult day for the cryptocurrency market. A $4,000 drop in Bitcoin quotes led to liquidations of more than 300,000 positions worth about $2 billion. Altcoins were hit even harder — declines from their peaks averaged 20% to 30%.
Despite the decline, it is still too early to say the bull market has ended. The correction seems natural both technically and from the speculative angle: several waves of buying squeezes — a common precursor to an upside move.
On the global chart we observe persisting overbought conditions — the market’s acceleration does not yet align with graphically fair values. Even relative to the more vertical trend line (shown below), the market is overbought by about $6,000-$7,000.
For the same target — around $41,000 — the pattern ‘ascending wedge’ points to it, which was breached yesterday. There is not much confidence in it, as counter-trend formations in a bull market do not always realize their full potential. However, at those levels sits the liquidation zone for leveraged positions of 1:10, accumulated around $46,700 — the zones with the largest volumes of the current consolidation.
Ascending wedge on BTC chart with levels of liquidation of margin positions and the figure’s price target highlighted in red. Fifteen-minute BTC/USDT chart on Binance from TradingView.
At present, Bitcoin does not lend itself to opening new trades. The problem also lies in the near impossibility of setting risk limits, and global quotes are near historical highs, complicating the search for long-position targets.
An optimal strategy would be to invest in altcoins that have not yet shown substantial gains but have high daily volumes near their accumulation zones. Bitcoin should simply maintain its long-term positions until the local uncertainty is resolved.
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