bitcoin (BTC) hit new two-month highs overnight on Jan. 19 as suspicions about the validity of the market grew.
Concern over the “exploitation” of BTC liquidity
This marked the pair’s highest point so far in 2023, the latest achievement in an unchallenged bullish rally since the FTX debacle.
Amid widespread mistrust of the move, however, new warnings have arisen as Bitcoin continued to defy predictions of a major retracement.
Analyzing the composition of the order book for BTC/USD on the largest exchange Binance, Material Indicators expressed surprise that those bidding on Bitcoin have yet to pull support.
“I was expecting the bid block to be placed on Friday the 13th all in, but it has drawn more than 2x the amount of supply liquidity into the range, which is bullish in the short term” , did he declare. commented.
“IMO, this move seems choreographed. Don’t fight it, but limit exposure to manage the risk.
As Cointelegraph reported, the whales were already in the spotlight after mass buying ensued last week.
“They are trying to attract more bids to exploit the low liquidity on the upside,” Material Indicators added.
“We could debate 100 different strategic reasons, but the net effect of large increases in supply liquidity is the same, at least until we retest local lows and they start to harden. .”
Fellow trader Byzantine General noted a similarly unusual order book composition on derivatives platform Deribit, with support between $20,000 and $21,000.
“Deribit’s book looks interesting. It’s not often that skewed to one side,” he argued.
Bitcoin supply may struggle to find a buyer
Doubts over the sustainability of the rally meanwhile extended beyond the exchanges.
In a Blog article published on the CryptoQuant analytics platform on January 16, contributor Phi Deltalytics reported potentially insufficient demand.
The reason, he said, was due to BTC returning to exchanges for sale, while supplies of stablecoins dwindled.
“The recent BTC rally has led market participants to deposit their BTC from cold storage to spot exchanges for profit taking purposes,” the commentary said.
“Such an increase in selling pressure along with a dwindling supply of stablecoins to buy will likely lead to a short-lived recovery. Increased demand is needed for the recovery to be sustainable.”
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