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Bitcoin (BTC) surged 5.01% on Wednesday, setting a new daily high at $86,990 and breaking weeks of consolidation. While this bullish move pushed BTC above its previous weekly high of $85,270, on-chain data suggests a potential reversal could be on the horizon.
Bitcoin Price Rally Faces Liquidation Risk
Bitcoin’s recent pump from a low of $82,501 to $86,990 has triggered key liquidity sweeps. However, according to CoinGlass’ liquidation heatmap model, the market now faces a major downside risk. The heatmap highlights three crucial liquidity levels at $85,000, $81,000, and $77,618. These levels collectively hold over $3 million in liquidity, which could act as magnets for price retracements if Bitcoin fails to maintain support above $85,000-$84,000.
Bitcoin’s Rally Fueled by Perpetuals, Not Spot Buyers
Adding to the bearish signals, data from Aggr.Trade reveals that the recent BTC surge was largely driven by perpetual traders rather than spot buyers. Historically, perpetual traders are known for short-term trades, unlike spot investors who exhibit a long-term holding strategy. If these leveraged positions begin to unwind, Bitcoin could face sharp selling pressure, leading to a correction.
Spot Buyer CVD Decline Signals Sell-Off Risk
Another crucial factor hinting at a potential downturn is the declining cumulative volume delta (CVD) for spot buyers. Since Bitcoin hit its peak of $86,990, the CVD has been dropping, indicating increased selling activity among spot traders. This further solidifies concerns that BTC’s uptrend may not be sustainable in the near term.
With the Federal Reserve’s interest rate decision and FOMC meeting behind us, Bitcoin’s next move remains uncertain. The key level to watch is $85,000—if BTC holds above it, further upside momentum is possible. However, a failure to defend this support could trigger a deeper correction toward $81,000 or lower.
Also Read: Bitcoin’s Bull Cycle at Risk? CryptoQuant CEO Warns of Bearish Shift
Investors should stay cautious as BTC navigates critical technical levels, with a potential shakeout looming in the near term.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
