Trader weighs the likelihood of further Bitcoin price declines

A practicing trader and founder of the Crypto Mentors project, Nikita Semov, explains the current market situation.

This week Bitcoin posted a false breakout, testing the key level at $38,800. We analyse the direction of the current trend and assess the risks of a further decline toward the main demand level.

On January 26, the price reached an important supply level of $38,800, formed by a large cluster of volume. The fact that the price showed rejection of these locally high levels with a strong seller reaction suggests a high potential for further declines in quotes.

A move back below $37,000 completed the false breakout of the volume-based VAH, and statistically the expectation is to reach the lower boundary, which sits at $31,500. Interim support levels will be $34,000 and $32,900, and with a break and retest of those levels a short position can be considered.

An additional confirmation is the ‘Absorption’ pattern in the cumulative delta. It reflects the absorption of all demand by selling limit orders. In the current market situation there is a large seller who does not let the quote move higher.

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