Key points:

  • Bitcoin dives more than 2% from its $120,000 daily high to swipe bid liquidity in an anticipated move.

  • Market projections nonetheless see a deeper retracement coming.

  • ā€œFrothā€ is starting to appear across crypto as altcoin open interest hits new all-time highs.

Bitcoin (BTC) dipped to take bid liquidity at Wednesday’s Wall Street open as traders eyed new BTC price bottom targets.

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView


Bitcoin initiates classic liquidity grab

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD falling over 2% on the day.

The pair had passed the $120,000 mark after the daily open, but momentum quickly vanished as sell-side pressure took over.

Earlier, Cointelegraph reported on exchange order-book liquidity, calling for a return to the $117,500 zone.

As traders eyed over $500 million in cross-crypto liquidations over the past 24 hours, data from CoinGlass showed new ask liquidity being added closer to the spot price.

ā€œThe liquidity of long and short high leverage is very juicy,ā€ CoinGlass had told X followers in part of a post earlier Wednesday.

BTC liquidation heatmap (screenshot). Source: CoinGlass

Commenting on market structure, market participants began to see the potential for a deeper BTC price correction to shore up support.

ā€œNot an actual breakout upwards on $BTC,ā€ crypto trader, analyst and entrepreneur MichaĆ«l van de Poppe concluded about the overnight trip to $120,000.

ā€œAgain a liquidity sweep and back in the range, which makes it likely that we're going to retest the lows of the range again.ā€
BTC/USDT two-hour chart with RSI data. Source: Michaƫl van de Poppe/X

Popular trader Crypto Virtuos suggested that $113,000 could come next thanks to the presence of an important Fibonacci retracement level.

ā€œI think, we might see a short retrace/correction. Could be 6/7% and that could push the price to the .618 level which is 113K, after that, we could see another push upwards,ā€ part of an X post summarized.

Crypto Virtuous added that he was ā€œpretty optimisticā€ about the eventual rebound, with Fibonacci analysis suggesting a target of $138,000.

BTC/USDT 1-day chart with Fibonacci levels. Source: Crypto Virtuos/X

Warning over altcoin ā€œfrothā€ amid record OI

Elsewhere, onchain analytics firm Glassnode warned about crypto market ā€œfrothā€ coming for the current altcoin surge.

Related: ā€˜Altseason is here’ — 5 things to know in Bitcoin this week

In particular, high levels of open interest (OI) across derivatives markets puts upside momentum at risk.

ā€œSuch conditions point to a degree of froth starting to form in the market, and may leave it more susceptible to sharp volatility,ā€ it warned Tuesday in the latest edition of its regular newsletter, ā€œThe Week Onchain.ā€Ā 

ā€œElevated leverage tends to amplify both upside and downside volatility, and can contribute to a more reflexive and fragile market environment.ā€
Top altcoin OI. Source: Glassnode

OI for four of the top altcoins by market cap passed $40 billion on Monday, Glassnode data confirms, marking a new all-time high.

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.