Wednesday, January 26, 2022
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Today, the crypto market is trading in the green. The price of bitcoin has risen over 5%, the price of ether has risen above the $4000 resistance, and the price of LUNA has risen over 15%, flipping AVAX and DOT.

Bitcoin price action

Bitcoin’s price began to rise again after building a base over $46,000. BTC was able to break through the $48,000 resistance. It even closed over $48,500 and the 21-day simple moving average.

There was also a break over a significant negative trend line with resistance above $48,100. On the upside, the price is hitting resistance near $49,500, and if it breaks through, bitcoin might reach $50,000. 

If the price falls further, it may test the $48,000 support level or the 21 simple moving average.

BTC Price setting up for a bear trap?

Will Clemente, a well-known on-chain expert, has identified several important factors that point to a potential bear trap for Bitcoin in the near future.

Clemente examines derivatives data in a new edition of the monthly Blockware Intelligence Newsletter to determine if traders are unduly bullish or extremely pessimistic on BTC. 

He says, overall, the price action is a healthy area , but since the flush, he has  noticed some open interest build-up.

Because aggregated financing has been subdued and even turned negative on Tuesday, he does not think these are aggressive longs.

According to Clemente, derivatives data shows that traders are not taking aggressive long positions, minimising the risk of another market downturn caused by a long squeeze like the one that occurred on December 4th.

Clemente also notes that the illiquid supply shock ratio, which measures the transfer of coins from liquid (weak hands) to illiquid (strong hands) entities, and price are diverging. 

The evidence he’s seeing from on-chain measurements and derivatives markets, according to Clemente, implies that Bitcoin may be setting up a massive bear trap. 

“The last time I called for a major Bitcoin short squeeze was on July 23rd, the day before we squeezed off the summer lows.We are currently not there YET, but the setup is becoming more likely [in my opinion].”

Clemente believes that a Bitcoin rally is possible, he also believes that the 30-day moving average of the spent output profit ratio (SOPR) shows that market players are now in the red.

He says he’ll keep an eye on BTC until the SOPR rises above 1, indicating that traders are profiting.

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