The weekend is just around the corner and fear remains the prevailing short-term sentiment in the cryptocurrency market. Bitcoin earlier today (BTC) the price fell to $ 47,250 and investors are biting their nails after US consumer price index (CPI) data shows inflation a. has reached 40-year high at 6.8%.
Data from Cointelegraph Markets Pro and TradingView shows that a noon push from the bulls to reclaim the $ 50,000 support level was easily defeated, with sellers sending the price back below $ 48,000, potentially forcing another lower daily high for the prime cryptocurrency.
BTC / USDT 4-hour chart. Source: TradingView
With the prospect of a sharp rise in prices towards the end of the year, traders have shifted their attention to managing risk and identifying the best levels to buy for drops. Here’s a look at what analysts are saying about Bitcoin’s outlook for 2022.
Extinction of open interest “will give way to another upward trend”
As seen in previous instances where the price of BTC has fallen rapidly, the open interest (OI) for BTC on derivatives exchanges has declined significantly, as highlighted in a recent report by Delphi Digital. The report noted a 50% drop in OI after this recent market downturn as long overindebted positions were decimated.
BTC futures open interest vs. BTC price. Source: Delphi Digital
While the experience was likely to be uncomfortable for traders who were overly exposed, analysts suggested that deleveraging events like this would be beneficial in the long run and will often “give way to further uptrend” as the previous foam and exuberance comes through a. replaced by a more measured trading environment.
The sharp drop in OI last month could also suggest that the near-term low for BTC may have been reached and that the current sell-off may be nearing exhaustion, according to Delphi Digital.
Delphi Digital said:
“The 30-day% OI decline for BTC has hit levels that previously signaled a bottom was forming (or not too far away).”
Range-bound trading for BTC until 2022
To According to Ben Lilly, co-founder of Jarvis Labs, the price of Bitcoin is likely to “stay in that trading range for at least the end of the month,” largely due to the fact that December 31st represents “the greatest open interest in” the terms of open contracts. “
As part of the argument, Lilly highlighted previous cases of major setbacks that resulted in a high number of liquidations and stated that it usually took the market some time to build momentum after those setbacks.
Open interest for BTC futures. Source: espresso
Lilly said
“Thankfully, this is a great setup for anyone looking to accumulate on a weekly basis or in the lower part of the current trading range.”
Related: Trader who cited bitcoin price crash in 2017 raises doubts about “double top”
Should traders be looking for a continuation of the uptrend?
The analyst and pseudonymous Twitter analyst “Rekt Capital” gave a final look at the sent the following chart of BTC price trading between two major exponential moving averages.
BTC / USD 1 week chart. Source: Twitter
Rekt Capital said
“Overall, BTC is currently consolidating within the two most important EMAs. Just like May 2021. And just like May … Sustained price stability and consolidation between these two EMAs will precede the continuation of the new macroeconomic uptrend. “
The total market cap of the cryptocurrency is now $ 2.238 trillion and the dominance rate of Bitcoin is 40.7%.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, you should do your own research when making a decision.
