Liquidity shrinks! Giant Whale Orders Hit Two-Year Low, Bitcoin Price Fears No Bottom
A new analysis warns that bitcoin will not bottom at the current price level, which is near $17,000, as liquidity on the buy side dries up.
According to a post-Christmas social media post, Material Indicators, an online-analysis resource, indicates that the market is less interested in protecting bitcoin at its current price range.
As the bitcoin market enters a consolidation with little to no significant volatility, analysts are keeping a close eye on what could happen this week when the annual close takes place.
Bitcoin's closing price on December 31 of this year represents not only the annual close, but also the weekly and quarterly K-line closes, and a flash crash or significant volatility could turn 2022 into a nightmarish "short market year.
Bitcoin has plunged about 60% against the dollar this year and is down 76% since its November 2021 high. But many analysts have warned that this may not be enough to signal the end of the short market. Now, the proxy data highlights the potential for further declines in bitcoin.
Material Indicators commented on order activity for the Bitcoin/USD trade on the Coinan exchange: "Liquidity is highlighting price levels, and there is clearly not a lot of atmosphere right now to think that the current price level is the bottom.
Discussing this topic, researcher Santiment said, "The range price of bitcoin is very much related to the decline in interest from the big whales.
Another chart highlights what Santiment calls the "correlation" between large orders of $1 million or more and the strength of the overall bitcoin price. The volume of such large orders is now at its lowest level since December 2020.
If the price continues to decline and then suddenly spikes, then historically that would be a long signal," the article said.
At the same time, trading firm QCP Capital had more bad news for cryptocurrency investors in its Just Crypto year-end summary and forecast.
Analysts see a "fifth wave of declines" for bitcoin and ethereum in early 2023, in line with the trend for risky assets, and a renewed strength in the U.S. dollar and bonds at the same time.
We continue to expect that any big upward move in bitcoin will be met with significant selling pressure," the analysts said. They also believe that bitcoin and ethereum will move in tandem.
Another correlation focuses on ARK Invest's Ark Innovation ETF (ARKK), with QCP Capital saying, "ARKK has always been two months ahead of bitcoin, which means bitcoin prices will go lower.