Introduction

Bitcoin, the leading cryptocurrency, is presently grappling with a significant resistance level at $86.8K, raising questions about its potential to sustain momentum. Currently, Bitcoin maintains a bearish structure on the daily chart, but there are hints of a possible bounce back towards the $88K mark.

Current Market Overview

Over the last week, Bitcoin has hovered above the crucial $82K support level, but the outlook remains grim when viewed through the 1-day timeframe. Traders should approach long positions with caution, as signals from the liquidation heatmap indicate that bulls may soon face headwinds.

Potential for Recovery

Lower timeframes, however, suggest there may be a glimmer of recovery if Bitcoin can decisively breach the $86.8K resistance. Fibonacci retracement levels from the bullish rally observed between August and December imply that the next significant support level could be as low as $72K. Nevertheless, metrics derived from on-chain data indicate a more optimistic narrative, as many long-term holders are choosing to HODL rather than sell, hinting at the potential for a price recovery.

Bearish Trends

With the BTC daily chart primarily reflecting bearish trends, the On-Balance Volume (OBV) indicator has shown a persistent downward trajectory since February, revealing that selling pressure still looms large. Despite the waning bearish momentum seen in the Awesome Oscillator, a shift towards bullish territory has yet to occur.

New Trading Range

After falling below a significant price range earlier this year, Bitcoin appears to have established a new trading range, with the mid-range level of $86.9K being tested multiple times over the past three weeks—both as support and resistance.

Key Resistance and Support Levels

The outlook remains precarious; if Bitcoin dips below $83K, it could trigger a stronger bearish trend. Conversely, a breakout above $86.8K could signal the beginning of an upward trend, offering traders renewed hope. Despite the OBV showing higher lows over the last ten days, there remains a notable lack of strong buying interest, insufficient to counteract the enduring selling pressure from earlier in the year.

Liquidity and Strategic Considerations

The 2-week liquidation heatmap indicates that the nearest liquidity cluster is situated at $88K, while the $83K level appears less formidable. Further down, the $80K support zone still looms but lies further beneath the current price level.

Conclusion

Thus, traders should brace for Bitcoin to gravitate toward $88K before potentially encountering a bearish rejection. According to technical analysis, if Bitcoin can flip the $86.8K level to act as support, it might signal a safer long position. However, the liquidation heatmap suggests that this scenario is uncertain, and traders should exhibit caution, especially bulls looking to capitalize on upward movements.

Vigilance is crucial; observing how Bitcoin reacts at both resistance levels will be vital for informed trading decisions. Any rejection at these points may present strategic short-selling opportunities, making this period particularly critical for traders and investors alike.