Key Takeaways
- Bitcoin (BTC) lost a key support level, and price action hints at a potential 3% dip on the horizon.
- $2.97 billion worth of short positions have been recorded at the $126,127 level, indicating strong resistance.
- Over the past week, exchanges have seen a decline of 47,121 BTC in their reserves, suggesting BTC’s strong long-term potential.
Bitcoin price fell 3% today as selling pressure re-emerged, with the BTC reaching $124,400 level for the second time. TradingView charts show that BTC had previously formed a similar downside move on August 14, which pushed the price down to $110,000, raising red flags.
At press time, BTC price trader around the $122,300 level, erasing major gains recorded over the past three days. Nonetheless, BTC exchange reserves have seen a downfall, which is a bullish indicator in the short-term.
Bitcoin Reserves Drop by 47,121 BTC
Despite the market downturn, on-chain analytics platforms reveal that exchanges’ BTC reserves have been falling significantly. According to the latest data, over the past week, exchange reserves have dropped by 47,121 BTC worth nearly $5.76 billion at the time of reporting.
In the crypto landscape, a drop in an asset’s exchange reserves typically indicates accumulation, as investors move the asset to their wallets, hinting at its long-term potential. However, since the BTC price is witnessing a downtrend lately, this accumulation trend is even more crucial for a reversal.
Also Read: Lib Work Joins Japan’s Bitcoin Adoption Wave, Buys $3.3M in BTC
Bitcoin Technical Analysis: Upcoming Levels to Look Out For
According to TimesCrypto technical analysis, BTC has lost a key support at $121,650 on the four-hour chart and is poised for downside momentum.
Based on the current price action, if bearish momentum continues and BTC closes a four-hour candle below the key support, there is a strong possibility that it could see a further price decline of 3.15%, potentially reaching the $118,000 level.
At press time, the Supertrend indicator turned red and moved above the BTC price, indicating a potential short-term bearish trend. Meanwhile, the Average Directional Index (ADX) has reached 45, above the key threshold of 25, signaling a strong directional move that is currently reinforcing the outlook.
Market Sentiment Turns Bearish
With the downside momentum, the market sentiment has shifted quickly, as they appear to be strongly betting on short positions. This comes after a massive $122 million liquidation of long positions, according to Coinglass data.
At press time, BTC’s major liquidation levels stand at $126,127 on the upper side (resistance) and $120,363 on the lower side (support).
At these levels, traders are highly leveraged, with $2.97 billion in short positions and $424.07 million in long positions. The heavy short positioning indicates strong bearish dominance, reflecting traders’ belief that BTC is unlikely to surpass the $126,127 level anytime soon.
When combining these metrics from Coinglass and CryptoQuant, it appears that short-term market sentiment is bearish, whereas the asset still shows long-term potential.
