Bitcoin price rejects $70,370 confirming bearish structure shift

Bitcoin fell below a key short-term level at $69,250 after being rejected from the $70,370 resistance zone, confirming a bearish structural shift on the 1-hour chart and signaling potential for a deeper correction.

"The sweep of the $70,370 high followed by a break of the $69,250 swing low confirms a bearish Change of Character, shifting the immediate market structure," an analyst from TradingView noted in a recent publication. This pattern indicates that sellers have absorbed the buy-side liquidity and are now in control.

The move initiated after a rally from $66,800, which saw buy-side liquidity swept above the previous high. According to data from Coinglass, the subsequent rejection and breakdown triggered a cascade of long liquidations totaling approximately $15 million in the last 4 hours across major exchanges like Binance and OKX, adding to the selling pressure. The funding rate for BTC perpetual futures has also cooled, dropping from 0.02% to a more neutral 0.01%, suggesting a decrease in bullish leverage.

This bearish structure now puts the focus on lower support levels. The next significant area of interest for traders is the support zone around $68,000. A failure to hold this level could open the door for a retest of the weekly low near $66,000, aligning with the potential for increased volatility as the US market digests recent inflation data and its impact on the Federal Reserve's rate policy.

The price action for Bitcoin is currently caught between macroeconomic influences and its own technical patterns. The recent price behavior is a classic example of a liquidity sweep followed by a market structure shift, a common pattern watched by technical traders for identifying potential trend reversals. The rally from $66,800 was sharp, but its failure to hold gains above the $70,000 mark shows a lack of conviction from buyers at these levels.

From a broader perspective, Bitcoin's price is sensitive to shifts in global liquidity and risk appetite. The recent strength in the US Dollar Index (DXY), which is trading above 105, often correlates with weakness in risk assets like cryptocurrencies. As long as the dollar remains strong, it could act as a headwind for any significant Bitcoin rally. Furthermore, while spot Bitcoin ETFs have seen consistent inflows, the pace has slowed, indicating that the initial wave of institutional buying may be stabilizing.

Looking ahead, the market will be closely watching the interaction between price and key moving averages on higher timeframes, such as the 20-day and 50-day moving averages, for signs of continued weakness or a potential bounce. The immediate test for bulls is to reclaim the $69,250 level. A successful break back above this point would invalidate the bearish CHoCH and suggest the recent dip was merely a deviation. However, as long as the price remains below this threshold, the short-term outlook remains tilted in favor of the bears.

This article is for informational purposes only and does not constitute investment advice.