- With an intraday loss of 0.85%, the Bitcoin price shows another rejection from the $90,000 mark, signaling a risk of continued correction.
- Over the last week, $450M in fresh Bitcoin leverage entered the market, lifting weekly OI by roughly 2%.
- BTC fear and greed index at 23% indicate an intense fear among crypto participants.
The pioneer cryptocurrency Bitcoin recorded a sharp volatility on Monday, December 29th as its price got rejected from $90,000 level again. A long-wick rejection candle showcased an intact overhead supply that keeps the Bitcoin price consolidating in a narrow range. Market Analysts suggest that recent moves in BTC can be attributed to leverage expansion while the market spot demand remains uncertain.
BTC Retail Leverage Rises as Smart Money Quietly Rotates Out
Despite a massive 40% drop in trading volume, cryptocurrency futures open interest rose by $2 billion in December, according to CryptoQuant analyst Crazzyblockk.
Combined Bitcoin and Ethereum perpetual and quarterly futures positions rose from $35 billion to $38 billion; a roughly 7% increase in total leverage, as the broader market was widely believed to be clearing weak hands.
Bitcoin-specific open interest increased $1 billion in that span of time from $22 billion to $23 billion. The move came when BTC was trading near $88,000 and the Crypto Fear & Greed Index was stuck in a relatively pessimistic reading of 27.
In the past week alone, another $450 million of fresh leverage has flowed into Bitcoin Contracts, causing the weekly open interest to increase by about 2%. Rather than trying to reduce exposure during the drawdown, participants continued to open new positions, mostly with a bullish leaning.
Exchange level data did not suggest widespread deleveraging. Binance, Bybit, and OKX posted slow and steady rises, whereas Gate.io experienced the most notable expansion. Every major platform that was being monitored either held or increased its aggregate open interest during the month’s price weakness.
Funding rates across the major venues were positive throughout, so that there was continual funding of the longs from the shorts to keep the directional bias in place. At the same time, some on-chain metrics point to large holders (whales) which distributed about 20,000 BTC, implying professional money which had been rotated out, while interest by retail-driven leveraging continued to pile up.
Bitcoin Price Stalls Near $90k as Breakdown Risk Looms
In the past eight weeks, the current correction trend in Bitcoin has shifted sideways as its price resonates within two converging trends. These dynamic resistance and support indicated that the coin price is the formation of a well-known forming a continuation pattern called symmetrical triangle.
Typically, such consolidation or continuation pattern bolster prevailing trend to replenish its exhausted momentum before resuming its path. As Bitcoin price narrows close to the peak of this triangle, a potential breakout or breakdown is looming in near future.
The declining slope in daily exponential moving average (20, 50, 100, and 200) accentuates that the path to least resistance is downward. Thus, the BTC price could breach the bottom trendline and witness a surge in market selling pressure.
The post breakdown fall could push the price by another 6.5% and challenge the $80,000 or prepare an extended dip towards $75,000.
On the contrary, the coin buyers could attempt a bullish breakout from the pattern resistance trendline to reverse ongoing correction. A potential breakout will accelerate bullish momentum, and bolster the Bitcoin price to find stability above the $100,000 mark.
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