BTC lost steam at $44K: What next?

OI remains high at $19.80b, down from $20.22b, but Funding is increasing – Longs are increasing against Shorts.

There is potential for a bounce before more downside.

TLDR

• Bitcoin has pulled back after failing to break $45k resistance.
• Key support is at $42.3k; losing this could trigger a deeper correction.
• Leverage remains high, which poses a downside risk.
• There is upside potential if the bull flag pattern plays out with a break above $45.6k.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Macro analysis

• ADP Employment Change came out at 103k, still positive but slightly below the 130k consensus. The main labour market data is out tomorrow (Friday).

• The DXY continues to push beyond $104, while the S&P looks increasingly top-heavy.

Technical analysis

• BTC has retraced from its local high of $44k, but it’s now potentially forming a bull flag.

•The local support is $42,300, with the most major horizontal resistance at $45,600.

• A breakout of the bull flag would likely send price to $45,600.

• The RSI is overbought on all major timeframes, particularly the 3D and the Weekly.

• We see BTC’s move up as needing some form of more significant pullback. However, the current structure is bullish.

• We wouldn’t look to add BTC here or sell/short it.

Market mechanics

• The Open Interest has moved down slightly from its yearly high of $20.22 billion to $19.80 billion now.

• The OI-Weighted Funding Rate has reset over the past few days back closer to 0.01% levels. However, this morning, it began to increase to 0.013%. This isn’t something that should concern us. However, if it continues to ramp up, this would concern us.

Cryptonary’s take

Bitcoin still maintains higher price levels and forms a bullish structure with a bull flag.

The local support of $42,300 will need to hold to maintain the bullish structure. If not, we will likely see a deeper pullback over the coming week or so to the mid $38Ks.

The mechanics show that there is still a fair amount of leverage in the system, but Longs and Shorts are in a more even balance now.

We’re not looking to add BTC at these higher levels. However, we would begin to lightly DCA into BTC at $38k. If we see sub $38k, that’s where our DCA buys will become more aggressive.