Analysis of Bitcoin’s Price Potential: Key Factors Influencing Movement Towards $90K

Bitcoin has shown a recovery in April, moving closer to $90,000 after previous lows. However, future price gains could be restricted by a lack of spot trading volume and high liquidation risks between $80,000 and $90,000. Traders should exercise caution due to these factors, as this piece does not provide investment advice.

After experiencing declines of 17.39% in February and 2.3% in March, Bitcoin (BTC) has begun to recover, posting a 3.77% increase in April. Despite forming new yearly lows at $74,500, BTC is now approaching the $90,000 mark. However, a few factors may restrict its upward movement over the next two weeks, likely capping it around this price point.

A significant determinant is the need for spot trading volume rather than just leveraged trades. Analysis by Cointelegraph indicates a cooling-off in the futures market, as the BTC-USDT futures leverage ratio decreased by 50%. While this de-leveraging suggests long-term positive implications, it has led to a situation where derivatives traders have considerable market control.

Bitcoin researcher Axel Adler Jr. noted that on April 11, net taker volume surged to $800 million, indicating heightened aggressive buying. This uptick correlated with BTC’s price increase from $78,000 to $85,000 within three days, aligning with historical data that shows high net taker volumes typically lead to price rallies. Nonetheless, community analyst Maartunn from CryptoQuant emphasised that the current uptick is driven by leverage rather than significant participation from spot traders.

Though Bitcoin’s apparent demand shows signs of recovery, it remains in a generally neutral state. Historically, demand can often stagnate after reaching a local minimum, which could result in limited movement for BTC. A breach of $90,000 seems unlikely without simultaneous buying engagement from both the spot and futures markets.

Furthermore, data from CoinGlass indicates large liquidation clusters between $80,000 and $90,000. Specifically, at a baseline of $85,100, a total of $6.5 billion in cumulative short positions risk liquidation if BTC reaches $90,035. Conversely, a decline to $80,071 could liquidate $4.86 billion in long orders. While these clusters may not directly influence market direction, they can instigate long or short squeezes and entice traders on either side of the spectrum.

Given the considerable capital at risk near the $90,000 range, it is plausible that Bitcoin may navigate through these liquidation clusters before progressing in one direction. Investors should remain cautious, as this article does not provide any investment advice. All trading carries inherent risks, and thorough research is advisable before taking action.