Key Takeaways
Bitcoin might be approaching a local bottom after making a 1.6% price jump from the $112k support level. Traders can wait for a move beyond $114.1k to confirm if such a reversal could materialize.
Bitcoin [BTC] saw a 1.88% drop over the weekend. The volatility has been muted compared to the end of the week, when BTC shed 4.5% in under two days.
It was an early positive sign that Bitcoin retested the $112k demand zone and was trading 1.6% higher at press time.
Source: CoinGlass
The liquidation heatmap showed that the magnetic zone at $112k-$114k had been swept. There was more liquidity to the south at $106.5k, but not every liquidity pocket needs to be visited.
An example of this would be toward the end of June, when BTC collected the liquidity at $99.8k and jumped higher instead of falling further to $97k, which was also a magnetic zone.
The liquidity to the north was sparse, but the highs at $120k were a likely price target. This statement assumes that Bitcoin has formed a local bottom and is ready to push higher. Let’s find out if this is likely the case.
Clues of a Bitcoin trend reversal
Source: BTC/USDT on TradingView
The 4-hour timeframe showed that the market structure remained bearish. The weekend saw below-average trading volume and volatility, hardly conditions that inspire a trend reversal.
It could be that price consolidates around $114k and continues the bearish trend on Monday.
The liquidation heatmap made an argument against this idea. So too did some on-chain metrics.
Source: Glassnode
The spent output age bands showed that the younger age bands were the ones spending in recent days. The metric visually categorizes the BTC moved (transacted) on a day based on how old the coin was held before spending.
The 1-day to 3-month-old coins were the ones that saw a flurry of movement over the past two days, as prices fell to the $112k region.
The medium-term holders of 3-month to 12-month-old coins did not stir noticeably, especially compared to earlier in the month.
This was a sign that the medium-term holders did not participate actively in the recent selling.
Source: Glassnode
The fear and greed index dropped sharply on the first two days of August. In June, the index went to neutral and even briefly touched fear levels before recovering. A similar scenario could unfold over the coming days.
In conclusion, the liquidation heatmap argued that BTC might have made a local bottom.
The price action and metrics highlighted here agree, although they do not rule out the potential for another minor dip toward $110k-$111k. Overall, traders have reason to prepare for a bullish swing.
The first sign of such a reversal would come if Bitcoin bulls succeed in flipping the $114.1k level to support.
