Bitcoin traders dismiss BTC price 2-week highs amid new liquidity drop

Bitcoin (BTC) tapped two-week highs on Jan. 30 as traders warned of thinning order book liquidity.

BTC/USD 1-hour chart. Source: TradingView

Analysis: Bitcoin l nearby support

Data from Cointelegraph Markets Pro and TradingView showed BTC price gains taking the market to $43,853 on Bitstamp.

A subsequent consolidation then set in, with $43,500 a focus at the time of writing after the Wall Street open.

Bitcoin thus capitalized on a change of tact since the weekend, now up over $5,000 versus the two-month lows seen previously.

As Cointelegraph reported, the improvement came in tandem with significantly reduced outflows from the Grayscale Bitcoin Trust (GBTC), one of the newly-launched spot Bitcoin exchange-traded funds (ETFs).

Now, however, bulls faced stiff resistance at $43,800 as part of an intraweek range.

“Trying hard to invalidate its Weekly Bearish Divergence (which arguably already played out on last week’s dip),” popular trader and analyst Rekt Capital wrote in part of the day’s posts on X (formerly Twitter).

Popular trader Skew warned that serious buyer conviction was still needed for a rematch with range highs at $48,000 seen earlier in January.

“Price has found much thicker ask depth here implying more supply overhead which affects taker flow & will require pretty high volume buying to take place into price for price to test $48K +,” he told X subscribers.

“Bids are so far are pretty thin on the orderbook except for $42K & $40K, below $38K is thick bid depth.”

Continuing on the topic of liquidity, trading resource Material Indicators noted an absence of bids directly below spot price — potentially opening up the path to downside.

“Much of this move since Friday has been choreographed anticipating Wednesday’s FED announcement and BTC Monthly candle close,” part of X analysis explained.

“With thinning bid liquidity below us, don’t be surprised if we see this move retrace itself.”

BTC/USDT order book liquidity for Binance. Source: Material Indicators/X

Material Indicators referred to the United States Federal Reserve’s decision on benchmark interest rate changes due on Jan. 31.

Spotlight on Fed’s Powell for BTC price shift

Material Indicators co-founder Keith Alan meanwhile suggested that the week’s landscape could provide a perfect storm for crypto volatility.

Related: BTC price at yearly open into FOMC — 5 things to know in Bitcoin this week

While he was “not expecting” a surprise at the rates meeting, he said in a video update on the day, the Fed’s commentary on the economy combined with the lack of liquidity could provide Bitcoin traders with a headache.

All eyes were on Fed Chair Jerome Powell’s speech and press conference.

“He might telegraph that things are changing a little bit and he may say that perhaps the Fed’s not going to cut as soon or as deeply as the market may expect — and that obviously creates some opportunity for some volatility,” he commented.

Per data from CME Group’s FedWatch Tool, the odds of rate decreases beginning in March at the next Fed meeting stood at just under 40% at the time of writing.

Fed target rate probabilities. Source: CME Group

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.